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2024 | OriginalPaper | Buchkapitel

2. Intermediaries’ Model in Banking and Finance and the Treatment of Fintech in the European Union: A Critical Approach

verfasst von : Patrick Barban

Erschienen in: Commercial Banking in Transition

Verlag: Springer International Publishing

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Abstract

Intermediation has become a major phenomenon. Major companies are acting as intermediaries between businesses and clients. European financial and banking legislation has been built around intermediaries, such as credit institutions or investment firms. It helps to control and supervise the main actors of these industries, in order to protect the markets and the clients. The development of the internet and the blockchain technology has brought changes, with crowdfunding or virtual currencies emerging. They offer individuals the means to avoid professional intermediaries, allowing for more freedom but increasing systemic risk. Reaction of the European Union to such innovations is multiple and pragmatic. The goal of this chapter is to analyze the situation and offer a critical approach to this intense European legislation activity.

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Vorheriges Kapitel Introduction

Nächstes Kapitel FinTech and Competition Regulatory Concerns in the EU Banking Business Framework

The word is used in the work of K. Judge, Direct, The rise of the Middleman economy and the power of going to the source, Harper Business, 2021, spec. preface X: “Middlemen are the connectors. They help people and companies overcome the informational, logistical, and other hurdles that stand in the way of an exchange that would otherwise make them both better off”.

See K. Judge, Direct, op. cit.

The attack of Russia against Ukraine highlighted the importance of the cereal market from Ukraine and strengthened the instability of the market, brought inflation and also raised major concerns as a high risk of starvation for some countries.

The scope of the study will be European Laws studied through French doctrine, as they are the main field of studies of the author.

See R. Bigo, Les bases historiques de la finance moderne, Armand Colin, Paris, 1922, 29; A. Colling, La prodigieuse histoire de la bourse, S.E.F., Paris, 1949, 59.

A directive is an act that is not directly enforceable but the member states will have to integrate the act in their law system. A regulation is, on the opposite, directly enforceable.

See J.-B. Bellon, G. Pauget, Union bancaire et évolution du modèle des banques universelles, Revue d’économie financière, 2015/2 (n° 118), 79–91. https://doi.org/10.3917/ecofi.118.0079. URL: https://www.cairn.info/revue-d-economie-financiere-2015-2-page-79.htm.

Governed by the Regulation (EU) N°648/2012 of the European Parliament and of the Council of 4 July 2012 on OTC derivatives, central counterparties, Official Journal of European Union, L 201, 27.7.2012, a netting system is a system where an entity mitigate the counterpart risk and can offer its own capital as guaranty if deemed necessary.

Infra, n° 14.

See K. Judge, op. cit., 199.

Infra, n° 23.

See S. Nakamoto: https://bitcoin.org/bitcoin.pdf [as of 29 September 2022].

Council Directive 93/22/EEC of 10 May 1993 on investment services in the securities field, Official Journal of the European Union, L 141, 11/06/1993 (no longer in force).

Even if the firm must notify its national authority and also the authority of the state where the service is offered. The goal of such notification is to coordinate the supervision of the firm but only the initial authority is competent to sanction the firm in case of a breach of regulation.

Directive 2014/65/EU of the European Parliament and of the Council of 15 May 2014 on markets in financial instruments (“MiFID 2”), Official Journal of European Union, L 173, 12.6.2014 (in force), art. 34.

Treaty on the Functioning of the European Union (TFEU), Articles 26 (internal market), 49–55 (establishment) and 56–62 (services).

Directive 2004/39/EC of the European Parliament and of the Council of 21 April 2004 on markets in financial instruments, Official Journal of European Union, L 145, 30.4.2004 (no longer in force).

Infra, n° 16 and 23.

In France, such breach of law will not void the contract (French Cassation Court, Com. 15 juin 2022, n° 20–22.160) but will be prosecuted under criminal law (French Monetary and Financial Code, art. L. 511–5 and L. 571–3 and can lead to an imprisonment of 3 years and 375 000 € for a physical person and 1 875 000 € for a moral person).

The centrality of real estate agents in the buying and selling of homes in the United States goes back to the 1800s. At that time, local real estate agents would gather together to exchange information about their listings. These “exchanges” served the interests of both buyer and seller clients by making it more likely that each would find the right match. Over time, these exchanges became formalized through a multiple-listing service, or MLS”, K. Judge, op. cit., 69.

See K. Judge, op. cit., 121 on the company “Trelora” and critical infrastructures like MLS.

See the list of services in MiFID 1, Annex 1, section A.

See M. Gahng, J. R. Ritter, D. Zhang, “SPACs”: https://ssrn.com/abstract=3775847 (revised in July 2022).

In a direct listing, the issuer will not go through a process of finding securities holders: it will directly put a part of the securities on the market for seeling. See T. Bonneau, P. Pailler, A.-C. Rouaud, e.a., Droit financier, 3^e éd., n° 1104.

Such as the placing of financial instruments on a firm commitment basis, where the bank must acquire for themselves all the securities that were not subscribed by their clients.

OICV-IOSCO published a report in 2015 about listing of SME:

https://www.iosco.org/news/pdf/IOSCONEWS348.pdf; on that report: P. Barban, “Rapport OICV de juillet 2015 sur le financement des PME au travers des marchés de capitaux: état des lieux des meilleures pratiques de régulation”, RISF 2015/4, 49–53.

See European Union, “Crowdfunding in the EU Capital Markets Union”, SWD (2016) 154 final, 3d of May 2016, 8.

Ibid.

Infra, n° 29.

Regulation 2020/1503 of 7 October 2020 on European crowdfunding service providers for business, Official Journal of the European Union, 20.10.2020, L 317/1.

The Crowdfunding regulation does not mention “issuers” or “companies” but a “project owner”, making the project central in the comprehension of what crowdfunding is. See previous regulation, art. 2.

Order n° 2014–559 of 30th may 2014 regarding crowdfunding, French Republic Official Journal, 31th may 2014, text n° 14.

See R. Vabres, “Bons de caisse, minibons, blockchain… résurrection ou révolution?”, Droit des sociétés 2016, n° 7, 1.

See M. Julienne, Le droit européen du financement participatif; Note sous Règlement (UE) 2020/1503 du Parlement européen et du Conseil du 7 octobre 2020 (…), RDBF 2021, n° 2, 26; J.-M. Moulin, Le cadre juridique français du financement participatif s’adapte après l’adoption du règlement européen relatif aux prestataires de services de financement participatif, RDBF 2021, n° 2, 61; P. Barban, Le nouveau cadre français du financement participatif, Banque & Droit 2022, n° 201, 52.

See K. Judge, op. cit., 199.

Infra, n° 23.

See J.-M. Jude, La mobilité bancaire, Les enjeux de la mobilité interne et internationale, IFJD, 2021, 231.

See S. Nakamoto: https://bitcoin.org/bitcoin.pdf [as of 29 September 2022].

Ibid.

A protocol can be defined as public or private depending on the possibility for anyone to intervene on the chain as a node. On public blockchain, the distributed ledger is public and anyone can use the infrastructure (through a user profile) and be a node running the consensus. On a private or consortium chain, access to the blockchain, either for using it or becoming a node, is restrained: see P. De Filippi, A. Wright, Blockchain and the law, the rule of code, Harvard University Press, 2018, 31.

Directive (EU) 2015/2366 of the European Parliament and of the Council of 25 November 2015 on payment services in the internal market, Official Journal of the European Union, L 337/35, 23.12.2015.

SWIFT for instance is a secured messenger service used by credit institutions for payment services: see S.V. Scott, M. Zachariadis, Origins and development of SWIFT, 1973–2009. Business History, 54 (3), 462–482. ISSN 0007-6791, https://doi.org/10.1080/00076791.2011.638502 [as of 29 September 2022].

See P. De Filippi, A. Wright, op. cit., 20.

Order n° 2017–1674 of 8 décembre 2017 related to the use of a distributed ledger for representation and transmission of financial securities. About that law, see P. Barban, V. Magnier (dir.), Blockchain and Company Law, Dalloz, 2019.

French law related to Public Finance, n° 81–1160, of 30 December 1981.

For a study on the impact of such system on the selling of shares of non-public companies, see: P. Barban (coord.), “Le recours à la technologie Blockchain en droit des sociétés”, Actes pratiques et ingénierie financière, 2021, n° 178, Dossier, 3–50.

Infra, n° 28.

See The financial markets and blockchain: outline of a blockchain infrastructure. Blockchain et droit des sociétés, dir. P. Barban, V. Magnier, Dalloz, 2019, 295.

Infra, n° 28.

For example in the Financial sector: MiFID 2, art. 2.

Directive (EU) 2015/2366 of 25 November 2015 on payment services in the internal market, Official Journal of European Union, 23.12.2015, L337/35 (“PSD”).

See PSD, art. (4, 15, and 16).

Supra, n° 18.

See T. Bonneau, X. Verbiest, Fintech et droit, RB éditions, 2017, 69.

PSD, recitals 27 and 28.

See P. Barban, ibid.

Regulation (EU) 2022/858 of 30 May 2022 on a pilot regime for market infrastructures based on distributed ledger technology, Official Journal of European Union, 2.06.22, L 151/1.

Aforementioned Regulation, art. 3.

Infra, n° 26.

See EBA, Report with advice for European Commission on cryptoassets, 9 January 2019, 4.

See H. de Vauplane, From paper securities to digital securities, Blockchain et droit des sociétés, dir. P. Barban, V. Magnier, Dalloz, 2019, 239.

Supra, n° 21.

S.E.C. v. W. J. Howey co., 328 U.S. 293 (1946).

See B. François, Initial Coin Offering. (ICOs) in French Law and comparative law, Blockchain et droit des sociétés, dir. P. Barban, V. Magnier, Dalloz, 2019, 273.

See P. de Filippi, A. Wright, op. cit., 140–141.

Regulation (EU) 2023/1114 of 31 May 2023 on markets in crypto-assets., Official Journal of EuropeanUnion, 9.06.23, L. 150/40 (MICA).

See H. de Vauplane, RTDF 2020/3, 74.

MICA, art. 4.

MICA, art. 59.

The term refers to a model (the MiFID directive) expanded toward other fields of regulation: see Th. Bonneau, La directive “crédit hypothécaire”, sa genèse, ses objectifs, son périmètre, RDBF 2015, study 21; M. Rousille, “Mifidisation” des règles de commercialisation des produits bancaires: l’ACPR relaye les orientations de l’ABE, Banque & Droit 2017, n° 175, 41.

Titel: Intermediaries’ Model in Banking and Finance and the Treatment of Fintech in the European Union: A Critical Approach
verfasst von: Patrick Barban
Verlag: Springer International Publishing
Buch: Commercial Banking in Transition
Print ISBN: 978-3-031-45288-8

Electronic ISBN: 978-3-031-45289-5

Copyright-Jahr: 2024
DOI: https://doi.org/10.1007/978-3-031-45289-5_2