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WHAT WILL THE NEW FINMA FINTECH LICENCE MEAN TO INVESTORS?

Recent news covered the Swiss Parliament’s introduction of the new FinTech licence to encourage innovation within financial companies that interested parties can apply for from the Swiss Financial Market Supervisory Authority (FINMA). Daniel Terry, CEO of IntaCapital Swiss (Geneva, Switzerland), that can advise interested companies in the qualification for FinTech licenses, gives his thoughts on what this will mean to the investor market, what the opportunities are for those in the UK and investors abroad and whether other countries should follow suit.

FinTech is a phrase that has been banded about in financial markets for a few years now. From financial start ups through to disrupter banks, FinTech seems to be the new Emperor’s clothes when it comes to investments. However, like any new entrant to the market, until it is established, few know of the real opportunities and risks.

Created to encourage innovation within the financial sector, the Swiss Financial Market Supervisory Authority (FINMA) is responsible for granting the licence that has more lenient requirements than a normal banking licence.  Permitting companies to accept public deposits of up to CHF 100m (with the provisos that the money isn’t invested or has interest paid on them), the FinTech licence can only be granted to a business registered in Switzerland.

With our main business based in Geneva, Switzerland and our regulated subsidiary in the United Kingdom (recently opened in Central London and the South of England), we have watched closely as the Swiss Parliament introduced the new FinTech licence.  A new financial regulatory category for Switzerland, FinTech sits between the regulated financial service providers/intermediaries (the least regulated financial professionals) and the highly regulated banks. This new ‘tier’ will be suitable for those financial companies operating inside Switzerland in the tech industry, including the growing crypto currency markets. 

Crypto currency is still in its infancy and the majority of the providers have little following or trust. We have already seen a rollercoaster of a ride with bitcoin for example that has soared by 60% this year from a crash of 75% in 2018[1]. IntaCapital Swiss is currently exploring an internet based crypto currency platform to help provide an interchange between real and physical currencies, which might include for example the possibility of banking retail store vouchers.  We believe it is these types of enterprises that would interest the new FinTech regulation.

But what does this mean to investors?  Will the introduction of FinTech create more opportunities and different financial platforms for investors to consider?

 As with all new innovations in finance, a level of safeguarding and assurance in investments are key.  The FinTech licence in Switzerland means that there is now more protection to invest into internet-based or ‘non-physical’ entities and may inspire more confidence to create investment and trading confidence in this sector. 

We believe that globally the move made by the Swiss government to introduce FinTech licences and the model of FinTech regulation will follow suite throughout the EU and the United Kingdom as popularity grows in ‘tech’ investments and the need to protect investors against fake online investments. Although already estimated that there are 1,600 fintech start-ups recorded in the UK alone[2] this year and over 11,500 organisations globally[3], the key is how many are robust enough to invest in and what security there are if the start up fails.   

Whilst many large Swiss financial institutions have existing ‘tech’ funds or operate subsidiary investment firms, they may consider consolidation under a new Swiss FinTech license. This also has the opportunity to pull investment from outside Switzerland back into its infamous financial bastion as foreign tech investment firms incorporate under the new Swiss FinTech license structure.

FINMA holds a high standard and those investment firms seeking a new FinTech licence will be subject to strict application qualifications and requirements. Whilst the process to apply is straightforward, FINMA has offered guidelines for applicants and those applicants will be subject to FINMA fees. 

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Business

STOP THE CONFUSION: HOW TO KNOW IF YOUR BUSINESS MAY BE INSURED AGAINST COVID-19

COVID-19

By Alex Balcombe, Partner at Harris Balcombe

 

The last few weeks has seen businesses in hospitality, tourism, retail, leisure and more forced to close their doors following the Government’s orders that they should close to prevent the spread of coronavirus.

While this is expected to flatten the curve and reduce the number of coronavirus cases, it will of course have an impact on businesses and employees alike.  For small businesses especially, there are many concerns about how they can claim on their insurance to weigh the fall of this impact.

 

Mixed Messaging

In response to calls to help struggling businesses, the Government has informed the public that companies who are facing turmoil will be able to claim on their business interruption insurance during this difficult time. For most, this is wrong.

Alex Balcombe

The insurance industry has also been extremely vocal that there is no cover for any coronavirus-hit businesses during this tough financial period. This isn’t strictly true either.

How can businesses see through the mixed messaging and best secure their future and their livelihoods and reduce money worries? It’s an extremely stressful time for many companies, and confusion over whether or not they can be covered can only cause more unnecessary stress.

Since it’s a new disease, most businesses will not be covered for business interruption due to COVID-19. In fact, the vast majority of policies do not cover anything related to COVID-19.

That said –  don’t rule out the idea that you may be covered. There is a chance that you will be covered against COVID-19, but not know it. This is a very small chance, but your current cover may already protect your business against the consequences of coronavirus, and the nationwide response to it –  though those with this cover are unlikely to realise it.

 

How Could I Be Covered?

Not everyone has business interruption insurance, as it’s not a legal requirement. It is entirely up to the policy holder to weigh up the benefits of having it, and their ability to trade should a disaster happen.

To be considered for cover for COVID-19, there are two types of policy extensions to your business interruption cover that can potentially cover you for this situation:

Infectious Disease Extension 

Many policies expressly state which diseases fall within the realm of being an infectious or notifiable disease. If this is the case, your policy will not provide cover. As it is a new disease, these policies will not have included COVID-19.

Other infectious disease extension policies will define the disease with reference to the actions of the government. Since the UK Government has named COVID-19 as a notifiable disease throughout the UK, it is possible that your business may fall into this definition, thus meaning you may be able to make a claim.

However, again, it’s not always that simple. Many policies require the disease to have been on your premises, while others specify a radius from your premises in order to qualify.

 

Denial of Access Extension (non-damage)

Denial of Access Extension (non-damage) policies may cover you if you’re prevented from accessing your property. This could be due to an event, or by the actions of a competent authority, which could cause your business interruption cover to engage.

If covered by this clause, there are often very subtle differences in wording in your policy. This could depend on the insurer or policy. You may well be covered, but it will depend on your particular circumstances, and the specific policy wording.

 

What now?

It’s clear that the Government needs to do more in ensuring there is clear messaging for businesses, and to help the insurance market look after policy holders. This is an unprecedented situation, and with many people looking to claim on their insurance, we’re already seeing major delays which could have a domino impact.

People throughout the world are understandably facing all kinds of worries because of the current pandemic. Our ways of living have changed, and many business owners will not have experienced a situation like this in their life times. If you own a business and are unsure about whether you can claim for business interruption, or are confused about ambiguous wording, get in touch with a loss assessor.

These claims are not simple, but loss assessors will be experts in business interruption insurance, and will specialise in large and complex claims. They will be able to help and guide you along the way, check your wording and work on your behalf to make sure you get everything you are entitled to.

 

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Wealth Management

HERE’S HOW YOU CAN LEARN TO TRADE RISK-FREE DURING THE COVID-19 MARKET CRASH

COVID-19

Trading app BullBear has launched new features to support budding investors looking to hone their skills against the backdrop of the COVID-19 stock market plunge. The risk-free financial game aims to empower the next generation of investors to learn how to trade stocks and shares by playing with dummy chips as opposed to real money. The app updates come as investors pull back from a volatile stock market rocked by the coronavirus outbreak.

 

At a time when some fresher investors are experiencing their first-ever stock market crash and seasoned investors are reluctant to invest new capital in the market, BullBear is empowering a whole new cohort of traders by teaching them how to trade effectively at no risk.

 

App users can engage in both short-term and long-term trading games using real-time market data from popular stocks enabling them to build investing confidence, making the app both engaging and educative.

 

With over 35,000 downloads, the app provides a free, fun way for thousands to learn how trading works by offering a practice arena in which trades take place and where no real money can be lost. Users can also enter into duals and competitions with other players. Whilst the app incorporates dummy chips to invest with, players can still redeem prizes by winning ‘bulls’ when they rank high in games. These bulls can be used to redeem rewards, such as gift cards from retailers like Amazon, Apple, Google Play and Netflix, at the in-app store.

 

Co-founder of the BullBear app, Anurag Saboo, stated

 

“I realised just how lacking the support for young investors was when my cofounder and I wanted to invest some money in stocks whilst at university. We had no idea where to start and so spent a couple of months trying to find a platform through which we could learn the basics before we risked any cash. But it simply didn’t exist. The resources that did were dull and theoretical. Paper trading can be very boring, and no-commission trading helps only if you make money out of your portfolio. Social methods of learning can help, for example, Etoro’s copy trades, but they still don’t let investors explore the markets themselves before putting money down. Combine this with the fact that only a small percentage of young investors make money through the market, and others end up staying away or are pushed away through losses, we decided to launch BullBear to offer a free, fun alternative.”

 

During a time of crisis accompanied by a turbulent stock market, the BullBear app provides a fail-proof way for budding investors to develop their trading knowledge, helping them to make more informed investments.

 

The BullBear app is available to download now on Google Play and the App Store.

 

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