Asset and portfolio management
FinTechs belonging to this category offer asset and portfolio management services via an internet platform or software programs and usually manage and dispose of the assets of their customers long or short term according to their specifications without actually holding the property or the possession of those assets. FinTechs, which provide information about and access to overnight or time deposit accounts at national and foreign banks and which execute the transactions to these accounts, also belong to this category. Some FinTechs however only act on request of the customer.
Aside from that some FinTechs offer software or internet solutions enabling users to manage and plan their personal finances on their own by providing graphics, overviews and compilations of their financial data and sometimes indicating financial risks or opportunities, but without actually managing the assets.
Attitude of the country towards modern asset and portfolio management services
While portfolio management is recognised and defined as an investment service under the Law on Capital Markets, asset management is only recognised by the Law on Credit Institutions as a financial service that can be provided by an asset management company or auxiliary services company.
Modern portfolio and asset management, as described herein, is not specifically regulated by Montenegrin legislation, which makes Montenegro a rather unreliable environment for both companies providing such services, as well as their potential customers.
Obligations and requirements to provide asset and portfolio management, or ancillary services described above
According to the Law on Capital Market, portfolio management is defined as an individual portfolio management provided by an investment entity in accordance with a specific agreement concluded with the client and when such portfolios relate to one or more financial instruments. As such, portfolio management represents an investment service provided by the investment entity that is incorporated in Montenegro and that holds a valid license issued by the Securities Commission. Alternatively, investment entity registered in Montenegro may delegate provision of portfolio management services to a foreign entity, only in relation to small investors, and under specific conditions prescribed by the Law on Capital Markets.
In order to obtain license for provision of investment services, the applicant needs to submit documentation evidencing minimum capital, overview of the ownership structure, managing organs, evidence that all requirements prescribing conditions for employees, licenced portfolio managers, as well as members of the managing board are met, etc. The fee for application for the license amounts to 2 per cent of the minimum capital required for investment entities, which equals EUR 125.000.
While asset management is recognised by the Law on Financial Institutions as one of the financial services provided by financial institutions, it does not prescribe for specific requirements in terms of registration and licensing of entities providing asset management services.
Additional comments regarding the legal situation for asset and portfolio management services or what FinTech’s must be aware of in this business area
Market size for asset and portfolio management services and biggest companies in this business area
According to the information available at the Securities Commission website, there are currently ten investment companies that have been issued with the license to provide portfolio management services, while there is no record on companies providing asset management services.
Additional comments regarding the economic situation for asset and portfolio management services or what FinTech’s must be aware of in this business area