Crowdfunding: An Infant Industry Growing Fast

Rohini Tendulkar Economist

International Organisation of Securities Commissions

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Disclaimer The views and opinions presented in this presentation are of the presenter only and

do not necessarily reflect the views and opinions of IOSCO or its individual members.

The information in these slides is based on the IOSCO Research Department Staff

Working Paper entitled ‘Crowdfunding: An infant industry growing fast’, authored by Shane Worner and Eleanor Kirby and which can be found here: iosco.org/research

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B anks

Government debt

SMEs/Real Economy/Infrastructure

Investors (inc l. re ta il)

Sec Mkts

Crowd Funding

Sec Mkts

Crowd Funding

Venture capital

Crowd-funding: four sub-categories

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Source: IOSCO Research Department

Crowd-funding

Social Lending/Donation

Crowd-funding

Reward Crowd-funding

Peer-to-Peer Lending

Equity Crowd-funding

Community Crowd-funding Financial Return Crowd-funding (FR Crowd-funding)

Global peer-to-peer new loan origination

IOSCO Research Department: Based on figures from selected peer-to-peer platforms within each country Notes: Peer-to-peer lending data is sourced directly from the websites of the largest providers. It therefore represents a lower bound estimate of the global loan pool.

5

0

1.000

2.000

3.000

4.000

5.000

6.000

2007 2008 2009 2010 2011 2012 2013 2014

$U

SD M

illio

ns

New loan origination Annualised estimate Data as at Feb-2014

Global Distribution of FR Crowd-funding Markets

6 S ource : IO S C O R esearch D epartm en t. B ased on da ta ob ta ined d irectly from p la tfo rm s, the re fo re rep resen ts the low est estim a ted s ize fo r each coun try

N o d a ta<11 ,0 0 -1 0 .8 91 0 .9 0 -2 0 .8 92 0 .9 0 -3 0 .8 93 0 .9 0 -4 0 .8 94 0 .9 0 -5 0 .8 95 0 .9 0 -6 0 .8 96 0 .9 0 -7 0 .8 91 0 0 6 <3 2 0 0

Source: IOSCO Research

Loans Originatedin $US Millions

Percentage of the peer-to-peer and equity crowd funding market by country

Source IOSCO Research Department: Based on figures from selected peer-to-peer platforms within each country Notes: Peer-to-peer lending data is sourced directly from the websites of the largest providers. It therefore represents a lower bound estimate of the global loan pool.

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United Kingdom

U K

U S

C hina

Regulation of crowdfunding

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• Investor P ro tection

• M itiga tion o f R isks

• N urturing Industry

• S upporting G row th

Regulatory approaches around the world

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Exempt or unregulated through lack of definition

Regulated as a collective investment scheme, intermediary

or as a banking activity

Prohibited

Special Status

Special status and specific regulatory frameworks

Investor /lender Borrower Platform

• Caps on amount invested

• Restrictions/definition of who can invest

• Awareness and confirmation of awareness of risks

• Thresholds

• Light prospectus

• Restrictions on types of borrowers

• Strong national connections

• Register for special status

• Restrictions on type of model

• Resolution frameworks and capital reserves

• Transparency and disclosure rules

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Looking forward – developments and challenges

• Cross border Crowdfunding • Securitization • Bitcoin Crowdfunding • Whole loan investments

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Looking forward – developments and challenges

• Cross border Crowdfunding • Securitization • Bitcoin Crowdfunding • Whole loan investments and bank

involvement

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Crowdfunding: An Infant Industry Growing Fast

Rohini Tendulkar Economist

IOSCO Research Department

A pril 2014

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