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A Guide to Financial Regulation for Fintech Entrepreneurs



A Guide to Financial Regulation for Fintech Entrepreneurs

Stefan Loesch

ISBN: 978-1-119-43670-6 June 2018 304 Pages

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The Fintech Entrepreneur’s Guide to Regulation and Regulatory Strategy

Fintech has been growing dramatically over the last few years, and it is now an important sector in its own right. This means that Fintech companies, who could so far often rely on a comparatively lenient regulatory regime, will now have to give serious thoughts on compliance with applicable regulatory rules. 

Operating in a highly regulated environment is tedious, but not all bad—companies that can play the regulatory game well have a strategic advantage, especially with regard to time-to-market and scaling. Nothing spells missed opportunity like a competitor building market share with a copycat product whilst you are still waiting for your license!

Written for professionals, this book helps anyone whose job has to do with formulating or executing a Fintech startup strategy or whose job touches financial services regulation, or anyone who simply wants an easy- to-read introduction to financial services and their regulation.   

  • Describes the purpose of and principle behind modern financial services regulation
  • Explains how to include regulation into a startup’s strategic planning to optimize time-to-market and scaling
  • Gives an overview of the entire financial services space, and which regulations apply where
  • Gives detailed references to 20 key regulations in the EU regulatory system, including PSD, GDPR, CRD, AMLD, MiFID, UCITSD, AIFMD

The first part introduces financial services regulation, its purpose, how it is created (especially in the EU and in the US), and it develops a framework for including regulations into the strategic planning of a company. It also gives a rundown of the current financial services space—players and products—and its key regulations. The second part describes a regulatory system in more detail. The system chosen is the EU because it is more consistent and unified than the US system where a lot of the regulation still is created at the state-level. However, as most financial regulation nowadays is determined at the global level, the principles found in EU regulation will be by and large also be found the US and other systems.

About the Book ix

Acknowledgments xi

About the Author xiii

PART I Fintech Regulation and Strategy 1

CHAPTER 1 Regulatory Strategy for Fintech Companies 3

CHAPTER 2 Overview of Financial Services Regulation 17

CHAPTER 3 Regulation in Practice 35

CHAPTER 4 The Financial Services Industry 65

CHAPTER 5 Retail Financial Services Products 77

CHAPTER 6 Wholesale Financial Services Products 99

PART II Selected Regulations in Detail 121

SHEET 1 Alternative Investment Fund Manager Directive 123

SHEET 2 Anti Money Laundering Directive 131

SHEET 3 Bank Recovery and Resolution Directive 139

SHEET 4 Cross-Border Payments Regulation 147

SHEET 5 Consumer Contracts Directive 149

SHEET 6 Consumer Credit Directive 151

SHEET 7 Capital Requirements Directives 155

SHEET 8 Deposit Guarantee Scheme Directive 169

SHEET 9 Distance Marketing in Financial Services Directive 173

SHEET 10 European Market Infrastructure Regulation 177

SHEET 11 Electronic Money Directive 183

SHEET 12 General Data Protection Regulation 187

SHEET 13 Market Abuse Regulation 195

SHEET 14 Mortgage Credit Directive 201

SHEET 15 Markets in Financial Instruments Directive 209

SHEET 16 Packaged Retail and Insurance-based Investment Products Regulation 225

SHEET 17 Payments Services Directive 229

SHEET 18 Rating Agencies Regulation 239

SHEET 19 Undertakings for Collective Investment in Transferable Securities Directive 243

SHEET 20 Unfair Commercial Practices Directive 253

Appendix A Important Definitions from European Legal Texts 257

Appendix B Abbreviations Used for Legal References 277

Index 279