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FinTechs belonging to this category operate trading platforms or online marketplaces for investment opportunities or certain financial contracts – e.g. securities, factoring etc. and sometimes furthermore provide contact to financial experts and tools for the decision-making.
FinTech-signalling and social trading platforms provide users with the opportunity to exchange opinions on financial investments and offer signal providers and traders the possibility to make their securities portfolio publicly visible. This way the portfolios can be linked to and followed by other traders via the platform automatically, so that the trading and investment strategy of the followed traders can be copied.
The platform often cooperates with a financial services provider or a credit institution where both the trader and the follower hold their securities accounts, and which execute the orders both of the trader and the follower and to which the platform passes on the trading decisions.
Introduction
Attitude of the country towards trading, social trading or signalling platforms
In recent years there has been significant consumer interest in various trading, social trading and signaling platforms. Some national and EU-based web platforms provide the possibility for trade of currencies, commodities and stocks, providing quick and easy access to global financial markets. FinTech tools and platforms are the preferred mean for trading activity of non-professional micro and small investors. This, however, seems to significantly change the overall national attitude and attire to investment in global financial markets instruments. Until recently, the latter being almost exclusively preferred investment for professional and/or medium to large investors.
Legal affairs
Obligations and requirements to provide trading, social trading or signalling platforms described above
Investment and trading in Bulgaria are carried out only through licensed investment intermediaries, banks and management companies that are licensed for this activity and are supervised by a supervisory authority. If the activity is carried out by an intermediary, the supervisory authority is the Financial Supervision Commission (FSC), which also issues the licenses. If the activity is carried out by a bank, a banking license covering the provisions of investment services is issued by the Bulgarian National Bank.
Providers of the services shall comply with Directive 2014/65/EU (MiFID II) and Regulation (EU) No 600/2014The new EU rules are transposed into the Bulgarian Markets in Financial Instruments Act (MIFA). The updated MIFA entered into force on 16 February 2018 and is considered the main national regulation of the sector. Additionally, Ordinance No. 38 of 21 May 2020 on the requirements for the activity of investment firms shall be also complied with.
Investment services are provided only by a joint stock company or a limited liability company. Investment intermediaries, with the exception of banks, are also prohibited from carrying out other commercial transactions on a sole proprietorship basis except in the cases provided by law.