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
Asset and portfolio management still relies majorly in the more traditional brokers. In accordance with the FinTech House 2021 report, 3% of the major 30 Portuguese FinTechs are within the wealth management sector, offering asset management, online banking service and software, hence this is a sector with high growth potential in the near future.
Obligations and requirements to provide asset and portfolio management, or ancillary services described above
Asset and portfolio management services over financial instruments are deemed investment services under the Portuguese Securities Code.
The provision of investment services is subject to an authorisation from CMVM. Authorisation requirements relate to the company’s capital structure, information on the shareholders, corporate governance, material/technical and human means, internal control/compliance, and risk management mechanisms, among others.
The minimum share capital is currently divided into three tiers – EUR 75,000, 150,000 and 750,000, depending on the services to be provided. Portfolio management is included in the EUR 75,000 tier, but a case-to-case analysis is required. Further prudential requirements apply.
Fees will be due for registration with CMVM. Due to comprehensive legislative change, prior contact with the regulator is advisable to confirm. Investment firms are subject to the AML duties.
Additional comments regarding the legal situation for asset and portfolio management services or what FinTech’s must be aware of in this business area
The New Regime applicable to investment firms entered into force on 1 February 2022, and new regulation is expected by CMVM. The New Regime simplified the applicable regulation to the investment firms, unified the several investment firms and appointed CMVM as the sole supervisor, which is expected to enhance the investment services market. Albeit this time of change CMVM is accepting authorisation requests and available to assist applicants with queries around the application process.
Market size for asset and portfolio management services and biggest companies in this business area
In the last quarter of 2021, the value of the managed assets in Portugal reached 71.8 million Euros, which represented an increase of around 2.5 million in comparison with the previous quarter and a decrease of 6.11 million when compared with the same quarter in 2020. One of the major players in the sector is Caixa Gestão de Ativos (around 25,2% of the individual market and 35% of the collective market).
Additional comments regarding the economic situation for asset and portfolio management services or what FinTech’s must be aware of in this business area
Portfolio and asset management are deemed regulated when performed over financial instruments, hence FinTechs should assess the type of assets in question in order to determine such authorisation trigger.