{"id":3833,"date":"2014-02-07T09:26:15","date_gmt":"2014-02-07T14:26:15","guid":{"rendered":"http:\/\/centerforfinancialstability.org\/wp\/?p=3833"},"modified":"2014-02-07T09:26:15","modified_gmt":"2014-02-07T14:26:15","slug":"iosco-issues-report-on-risks-and-benefits-of-financial-return-crowd-funding","status":"publish","type":"post","link":"https:\/\/centerforfinancialstability.org\/wp\/2014\/02\/07\/iosco-issues-report-on-risks-and-benefits-of-financial-return-crowd-funding\/","title":{"rendered":"IOSCO Issues Report on Risks and Benefits of Financial Return Crowd-Funding"},"content":{"rendered":"<p>IOSCO published a Staff Working Paper titled <em>Crowd-Funding: An Infant Industry Growing Fast<\/em>, which provides a global overview of the crowd-funding industry, along with a mapping exercise of the global regulatory landscape. The purpose of the report is to identify investor protection issues and to determine whether crowd-funding poses a systemic risk to the global financial sector.<!-- break --><\/p>\n<p class=\"Body\">The report analyzes financial return crowd-funding (&#8220;FR crowd-funding&#8221;), which refers to peer-to-peer lending and equity crowd-funding. According to the report, the main challenge facing regulators and governments is determining how to encourage crowd-funding, while also mitigating the risks associated with its growth and protecting investor interests.&nbsp;<\/p>\n<p class=\"Body\">The working paper identifies the main benefits of FR crowd-funding as follows:<\/p>\n<ul class=\"unIndentedList\">\n<li class=\"Body\">it provides a boost to economic growth through flows of credit to SMEs and other users in the real economy;<\/li>\n<li class=\"Body\">it fills the credit gap left by banks;<\/li>\n<li class=\"Body\">it offers lower costs for capital\/high returns, leveraging off a lower cost basis; and<\/li>\n<li class=\"Body\">it provides a new product for portfolio diversification.<\/li>\n<\/ul>\n<p class=\"Body\">The main risks are identified as:<\/p>\n<ul class=\"unIndentedList\">\n<li class=\"Body\">risk of default;<\/li>\n<li class=\"Body\">platform risk;<\/li>\n<li class=\"Body\">risk of fraud;<\/li>\n<li class=\"Body\">risk of illiquidity; and<\/li>\n<li class=\"Body\">risk of investor inexperience.<\/li>\n<\/ul>\n<p><span class=\"Body\">The report concluded that the FR crowd-funding market does not present a systemic risk to the global financial sector at present, but the challenges ahead will include (i) cross-jurisdictional contractual and legal harmonization, and (ii) dispute settlement and resolution issues. <\/span><\/p>\n<p class=\"Comment_Box\"><span class=\"Subheader\">Se<\/span><span class=\"Body\"><span class=\"Subheader\">e:<\/span> <a href=\"http:\/\/www.iosco.org\/research\/pdf\/swp\/Crowd-funding-An-Infant-Industry-Growing-Fast.pdf\">IOSCO Report<\/a>.<\/span><\/p>\n<p>&nbsp;<\/p>\n","protected":false},"excerpt":{"rendered":"<p>IOSCO published a Staff Working Paper titled Crowd-Funding: An Infant Industry Growing Fast, which provides a global overview of the crowd-funding industry, along with a mapping exercise of the global regulatory landscape. The purpose of the report is to identify &hellip; <a href=\"https:\/\/centerforfinancialstability.org\/wp\/2014\/02\/07\/iosco-issues-report-on-risks-and-benefits-of-financial-return-crowd-funding\/\">Continue reading <span class=\"meta-nav\">&rarr;<\/span><\/a><\/p>\n","protected":false},"author":4,"featured_media":0,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[9],"tags":[],"class_list":["post-3833","post","type-post","status-publish","format-standard","hentry","category-reg"],"_links":{"self":[{"href":"https:\/\/centerforfinancialstability.org\/wp\/wp-json\/wp\/v2\/posts\/3833","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/centerforfinancialstability.org\/wp\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/centerforfinancialstability.org\/wp\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/centerforfinancialstability.org\/wp\/wp-json\/wp\/v2\/users\/4"}],"replies":[{"embeddable":true,"href":"https:\/\/centerforfinancialstability.org\/wp\/wp-json\/wp\/v2\/comments?post=3833"}],"version-history":[{"count":2,"href":"https:\/\/centerforfinancialstability.org\/wp\/wp-json\/wp\/v2\/posts\/3833\/revisions"}],"predecessor-version":[{"id":3835,"href":"https:\/\/centerforfinancialstability.org\/wp\/wp-json\/wp\/v2\/posts\/3833\/revisions\/3835"}],"wp:attachment":[{"href":"https:\/\/centerforfinancialstability.org\/wp\/wp-json\/wp\/v2\/media?parent=3833"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/centerforfinancialstability.org\/wp\/wp-json\/wp\/v2\/categories?post=3833"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/centerforfinancialstability.org\/wp\/wp-json\/wp\/v2\/tags?post=3833"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}