Trading platforms / social trading platforms / signal following
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.
Attitude of the country towards trading, social trading or signalling platforms
With the increasing development of internet technology and mobile communication, many online trading and social trading platforms have emerged in China. Trading platforms, social trading platforms and signal following can help consumers follow the market, view transaction information and exchange experiences whenever and wherever possible.
Obligations and requirements to provide trading, social trading or signalling platforms described above
In China, trading platforms/social trading platforms/signal following are actually providing the internet content to the customer. Hence, the FinTechs engaged in such business shall apply for an Internet Content Provider (ICP) license or an ICP filing from the telecommunication authority. To be specific, if a FinTech provides information or other services and charges relevant fees through such services, it would be deemed as an “ICP for profit” and should apply for an ICP License. If a FinTech provides services containing public and sharing information for free and does not charge a fee for such Internet service, it is an “ICP not for profit” and should apply for an ICP Filing.
With respect to the requirements on the ICP License/filing, though without clear minimum capital requirements, the authorities still require that the applicant shall have sufficient funds and professionals to carry out the business. In practice, the registered capital of the FinTechs conducting the ICP for profit business shall be at least RMB1 million (equivalent to approximately USD157 thousand or EUR142 thousand), while the FinTechs carrying out ICP not for profit business have no such requirement.
Additional comments regarding the legal situation for trading, social trading or signalling platforms or what FinTech’s must be aware of in this business area
Currently, Chinese authorities have not issued any laws, regulations or policy documents specifically targeting the trading platform/social trading/signalling platforms. In practice, FinTechs operating the said platforms are generally classified as internet content providers.
FinTechs in this area shall be very cautious to limit their business to within providing general information which may be helpful for the customer to make the investment. It is vital that the investment decision shall be made by the customer at its own discretion. Assuming a company provides detailed guidance or advice to the specific customer for the customer’s interest or collects the fund of the customer to make the investment in the name of the company, it shall obtain the applicable financing licenses for such financing services, such as security investment consulting service license issued by CSRC. Therefore, FinTechs should be very cautious not to conduct any business subject to the financing licenses and strictly focus on the allowed business – i.e. providing helpful information, rather than being an active agent of the customer.
Market size for trading, social trading or signalling platforms and biggest companies in this business area
There are no accurate official statistics on the market size of trading, social trading or signalling platforms. According to reputation and influence, the largest two (2) online trading platforms in China are Hithink RoyalFlush, and Snowball.
Additional comments regarding the economic situation for trading, social trading or signalling platforms or what FinTech’s must be aware of in this business area