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
Generally, the Serbian residents may purchase foreign financial securities on online platforms in line with the applicable rules. Under the Forex Law, the residents (legal entities, natural persons and entrepreneurs) may, among others, purchase foreign shares, long-term debt securities (with maturity longer than one (1) year) and short-term securities (with maturity less than one (1) year) issued by the EU and its member states, OECD, IFIs and development banks, financial institutions founded by the foreign states, and issued by entities with their seat in the EU member state and invest in foreign investment funds.
However, the NBS and SEC issued on numerous occasions warnings that trading with financial instruments on foreign platforms, which are usually not licensed, is risky.
The CM Law defines operation of multilateral trading platform as investment service which may be provided in Serbia only by the locally licensed entities. Further, in case it would be determined by the regulator that the platform is providing investment or payment services in Serbia, such services could be provided only by the local entities based on a local license.
Provision of both domestic and international factoring services is regulated pursuant to the separate Law on Factoring, which lists the conditions under which these services can be provided in Serbia. Provision of online factoring services is an increasing trend in Serbia.
Obligations and requirements to provide trading, social trading or signalling platforms described above
The CM Law provides a framework for incorporation of multilateral trading facility/platforms (“MTF”). MTF is a multilateral system, operated by an investment firm or a market operator, which brings together multiple third parties buying and selling interests in financial instruments within the system and in accordance with its non-discretionary rules in a way that results in a contract.
The CM Law and relevant bylaws provides the requirements for a license which must be obtained by an entity which will organize trading on the MTF, i.e., market operator. The license is not required for the establishment of the MTF, but for the operator of the MTF. The investment company may establish the MTF if it obtains a specific license for market operator from the SEC.
The license for market operator will be issued by the SEC after the complete documentation is submitted, which includes general acts, business models, information on organizational structure and members of the corporate government, as well as capital requirements proofs, and fees evidence to the Commission. Fees include fees for obtaining the license or amendments to the license in accordance with SEC’s bylaws. In regard to the capital requirements, initial capital for the MTF market operator amounts EUR 730,000 depending on type of services. The MTF market operator should maintain minimum capital requirements in accordance with the SEC’s regulations.
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
Market size for trading, social trading or signalling platforms and biggest companies in this business area
The market is relatively small and undeveloped. There is no publicly available information about the number of customers or companies operating in the sector of trading, social trading or signalling platforms.
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