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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
Colombia is a 50 million consumers market that must be explored. Yet, the general concern is safety of the transaction. There is a lack of confidence of customers when trading on the Internet looking for investment opportunities.
Legal affairs
Obligations and requirements to provide trading, social trading or signalling platforms described above
Companies intending to operate trading platforms or online marketplaces for investment opportunities or certain financial contracts (e.g. securities, factoring etc.) must comply with several requirements stated in Colombian law. The specific requirements depend on each specific security to be traded.
Trading services are subject to the conditions set out in Decree 2555 of 2010 related to the offering of financial services in the Colombian territory.
Foreign financial services offered through these platforms can only be promoted in the Colombian territory through representative offices, brokerage firms or financial corporations, under the terms and conditions established by the Colombian Finance Superintendence.
The Colombian Finance Superintendence has stated that to operate in the Forex (foreign exchange service) market, the investors enter into an agreement directly with a foreign entity, with his/her own resources and assuming the consequences of the investment decisions.
The applicable framework of Forex transactions will correspond to the provisions contained in the contract and in the country’s laws under which foreign entities are operating.
Foreign entities are not subject to any type of inspection, surveillance or control by the Colombian Finance Superintendence or other authority in Colombia.
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
The offering of exchange trading including the use of electronic trading, is reserved for entities subject to surveillance of the Colombian Finance Superintendence. If the entity providing these services is not supervised by the Colombian Finance Superintendence, then the practice would be illegal creating the possibility of a fine and disablement of the platform.
Economic conditions
Market size for trading, social trading or signalling platforms and biggest companies in this business area
The potential market is big. The development and growth of the same is still low due to fraud being a main concern. Many trading platforms offer their services from abroad and in that case, they are out of scope of the Colombian Finance Superintendence’s supervision.
Additional comments regarding the economi