ERDEM-NEWSLETTER-2018-metin

227 CAPITAL MARKETS LAW based crowdfunding, because either of the products offered by the platforms are not considered as financial instruments under MiFID (e.g. profit-participation loans, silent partnerships or non-readily realizable securities), or a general exemption exists for brokers not handling client money 13 . Additionally, investment services to be pro- vided in investment-based crowdfunding might differ among Member States, always depending on business models, with variations in terms of capital requirements, conduct of business rules, conflict of interest rules and organization requirements and available exemptions. As the ESMA suggested, the service of reception and transmission of orders would better suit investment-based crowdfunding, but other services could also fit, depending on the business model adopted, such as ex- ecution of orders, placement without firm commitment, investment advice, and operating a multilateral trading facility. In some cases, also the management of a collective investment scheme might be iden- tified 14 . The Member States that have adopted a bespoke regime (Austria, Belgium, Spain, France, the UK, Italy, Germany, Portugal) show rele- vant differences as to the approach followed and the solutions adopted. For example, in the UK, investment-based crowdfunding fell within the scope of FCA regulations, where platforms allow people to invest in new or established businesses by buying shares or debt securities 15 . In 2014, the FCA introduced a special regime for investment-based crowdfunding where new customer protection rules for the sale of non-readily realizable securities are applied. In principle, investment- based crowdfunding is regarded as a regulated activity, the type of which depends on the business model adopted, and may not even co- incide with one of MiFID’s activities, being subject to a lighter regime (e.g. financial promotion and ‘arranging deals in investments’ when intermediaries only bring together an issuer with potential sources of funding). Moreover, the tied agent exemption is applicable under Art. 29 MiFID to platforms acting as agents of an investment firm and, therefore, under the latter’s responsibility. 13 Ferrarini , p. 3. 14 Ferrarini , p. 3. 15 FCA, A review of the regulatory regime for croedfunding and the promotion of non-readily realisable securities by other media, February, 2015, p. 2.