A Guide to Financial Regulation for Fintech Entrepreneurs

ADVANCE PRAISE FOR A GUIDE TO FINANCIAL REGULATION

"Having been a Fintech venture capital investor for many years now, I am keenly aware of the importance of regulation. Indeed, one of the main issues I encountered when assessing a potential investment is how well–versed the founding team is when it comes to regulatory matters. This will most assuredly be even more important going forward. As such, I am delighted to see Stefan, a Fintech expert I rely on often and who I hold in great respect, covering financial regulatory matters and how important they are for entrepreneurs in his new book. If you are serious about Fintech, please read this book."
Pascal Bouvier, Fintech VC

"If you think of regulation as too hard, you′ll either end up in jail or fail for having never tried. In a world where tech is colliding with finance it′s great that someone′s finally written the missing manual!"
Simon Vans–Colina, Monzo

"Successfully engaging with regulation will differentiate winners from losers in Fintech, and this book offers a strong foundation for founders and investors alike."
Sid Singh, Fintech Investments, US Bulge Bracket Bank

"Stefan lucidly and succinctly captures the essence of relevant regulation for Fintech firms. His book is a very helpful summary of regulatory and risk management priorities."
Jonathan Howitt, Board Member, Professional Risk Managers′ International Association

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

STEFAN LOESCH is an experienced financial services executive, tech entrepreneur, and author. He is currently working on a number of ventures that use crypto and blockchain technology within the framework of traditional finance and regulation. His past ventures include an early stage peer–to–peer lending start–up and an edtech start–up. He is co–editor and one of the authors of PRMIA′s Professional Risk Managers Handbook.

In the past, he was an Executive Director at J.P. Morgan, and a consultant in McKinsey′s Corporate Finance practice. He holds a degree in Physics from the University of Bonn and an MBA from INSEAD.