Disintermediation in Fund-raising: Marketplace Investing Platforms and EU Financial Regulation

In recent years, also thanks to the post-crisis distrust towards traditional finance and consequent demand for ‘democratized’ finance, the ‘platform economy’ has spread also in the financial sector. In the capital markets area, this has entailed the emergence of the so called ‘disintermediation’, ie the elimination of traditional financial intermediaries and the creation of ‘P2P-marketplaces’. Disintermediated finance challenges current financial regulation, conceived with traditional intermediaries and centralized systems in mind. Regulators and supervisors have now to assess whether such disintermediated activities correspond to mere information/technical services or rather to new professional services that require special regulation or, instead, are equivalent to regulated services (‘re-intermediation’) and, in this last case, whether existing rules are fit to regulate them. The present chapter investigates, from a legal point of view, Investment-based Crowdfunding (also called marketplace investing) and its original features, within the landscape of business fund-raising, assessing whether it represents a new form of intermediation and/or deserves an ad hoc regulation, with particular regard to EU financial regulation and in a comparative law perspective. Special attention will be reserved to the critical analysis of the European Crowdfunding Services Regulation (in the process of being formally adopted after difficult trilateral negotiations).