Which is the UK Crowdfunding Association. The website includes a Code of Practice and FAQs.
More crowdfunding here.
A NOTEPAD ON COMPANY AND FINANCIAL LAW, NEWS AND REGULATION
A lengthy NYT article discusses the rise of crowdfunding and peer-to-peer lending in the United States, and the delay in writing new rules required under the JOBS Act as the SEC struggles to balance encouraging these new financing models with investor protection.
See also: Lots more crowdfunding posts.
See also: FSA acknowledges that crowdfunding exists, says that it is only for sophisticated investors and more crowdfunding here.
In a paper published today by BIS, “Removing Red Tape for Challenger Businesses”, the Government confirms that it will not introduce a new regulatory regime for peer-to-peer platforms. The industry will instead be encouraged to self-regulate by asking the Peer-to-Peer Finance Association to increase membership and continue to build its voluntary code. A Government and agency working group will be formed to “monitor the appropriateness of the current regulatory regime”.
The following excerpt from the BIS paper succinctly describes the existing regulatory regime and why BIS has decided – for the time being – not to change the existing rules around peer-to-peer lending and crowdfunding:
This from Techonomy discusses difficulties with the crowdfunding model – from a US perspective, but much of it is applicable to the UK.
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US “Jumpstart Our Business Startups Act” about to be signed into law
Crowdfunding bills in US Congress attempt to change securities law framework for start-ups
UPDATE 16 March 2012: The Taskforce has now published its report, which we discuss in this post.
The Department of Business, Innovation and Skills yesterday announced the formation of an “industry-led Taskforce…that will examine the challenges facing business in diversifying their finance”. The context of this exercise is the difficulties that small and medium-sized businesses report in obtain bank lending, and its implicit aim is to promote different methods of non-bank lending. BIS’s press release states that the Taskforce’s focus will be:
“on debt and credit products, looking at a range of finance choices, old and new, from corporate bonds to ‘crowd-funding’”.
The reference to corporate bonds is to the recent increase in:
“Crowdfunding” is a generic term applied to lending aggregated from a group of individuals or non-bank corporate lenders to private companies (disintermediating the banking sector in the process), of which the leading example in the UK is Funding Circle.
Summary of industry stance and the Treasury / FSA consultations promised in the New Year, from Pinsent Masons.
The consultation will be announced today.
“Goldman Sachs, JP Morgan and Bank of America Merrill Lynch just won’t get out of bed in the morning for less than a $300 million offering”
Shifting the financing of UK SMEs away from bank lending
In this February 2011 post we summarised the key features of the London Stock Exchange’s Order book for Retail Bonds (ORB), which in the words of the Exchange “provides corporate debt issuers with direct access to retail investors through a cost effective and transparent electronic market”. This first serious attempt to launch a UK retail bond market has seen some success in 2011, with eight companies raising £1.22 billion.
In November 2011 the Exchange and Evolution Securities held a Retail Bond Issuance Forum, to encourage interest from corporate issuers in having their debt traded on the ORB. A comprehensive presentation by Evolution Securities on the UK Retail Bond Market can be accessed here, and the Exchange’s own overview of the ORB is here.
Key themes from the Retail Bond Issuance Forum
Two of the themes that emerged from this Retail Bond Issuance Forum were the appetite of retail investors for bonds issued not just by companies but also by universities, charities and housing associations; and that issuers were not put off by having to produce a retail prospectus. The other key themes of the Forum are summarised in a note on the Exchange’s website, as follows: