Fintech
In Response to Self-Executing Congressional Mandates, SEC Adopts Offering Reforms for Business Development Companies and Registered Closed-End Funds
Washington, D.C.–(Newsfile Corp. – April 8, 2020) – The Securities and Exchange Commission today voted to adopt rule amendments to implement certain provisions of the Small Business Credit Availability Act and the Economic Growth, Regulatory Relief, and Consumer Protection Act relating to business development companies and other closed-end funds.
Business development companies—or BDCs—are a type of closed-end fund established by statute that primarily invest in small and developing companies. As directed by Congress, the rules will allow business development companies and other closed-end funds to use the securities offering rules that are already available to operating companies. The amendments are designed to streamline the registration, offering and investor communications processes for BDCs and registered closed-end funds and will provide important benefits to market participants and investors, including advancing capital formation and modernizing and streamlining disclosures. The Commission’s reforms will allow eligible funds to engage in a streamlined registration process that has long been available to operating companies, including modernized communications and prospectus delivery procedures and requirements. As a result, they will be better able to respond to market opportunities.
“The amendments we are adopting will modernize the offering process for eligible funds in a way that, as borne out by our experience with operating companies, will benefit both investors in these funds and the companies in which they invest,” said SEC Chairman Jay Clayton. “This is another example of our staff’s laudable efforts to modernize our rules in a manner that furthers all aspects of our mission. It is my hope, particularly when many of our small and medium sized businesses are facing profound challenges not of their own making, that these and other modernization efforts will provide those businesses more efficient access to financing.”
The reforms include changes that supplement the specific amendments mandated by Congress. These changes are designed to better align the modern immediately-effective or automatically effective offering process long available to other types of funds with the structures of the newly eligible funds. They also include disclosure requirements and new structured data requirements that will make it easier for investors and others to analyze fund data.
Most of the amendments will become effective on Aug. 1, 2020.
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FACT SHEET
Securities Offering Reform for BDCs and Closed-End Investment Companies
April 8, 2020
Action
The Commission is adopting rule and form amendments to allow business development companies (“BDCs”) and registered closed-end funds (collectively, “affected funds”) to use the registration, offering, and communications rules that are already available to operating companies. In 2018, Congress passed two laws directing the Commission to adopt many of these changes. The reforms also include other amendments designed to help implement the congressionally-mandated amendments by further harmonizing the disclosure and regulatory framework for these funds with that of operating companies.
These amendments are designed to reduce regulatory costs and facilitate capital formation, particularly for small and mid-sized businesses, while modernizing disclosures to streamline the way in which funds provide valuable information to investors.
Background
In 1980, Congress established BDCs for the purpose of making capital more readily available to small, developing and financially-troubled companies that do not have ready access to the public capital markets or other forms of conventional financing. In 2018, Congress directed the Commission, through the Small Business Credit Availability Act (the “BDC Act”) and the Economic Growth, Regulatory Relief, and Consumer Protection Act (the “Registered CEF Act”), to adopt rules that allow BDCs and other closed-end investment companies to use the securities offering rules that are already available to operating companies.
Highlights
Shelf Offering Process and New Short-Form Registration Statement
Eligible affected funds will be able to engage in a streamlined registration process to sell securities “off the shelf” more quickly and efficiently in response to market opportunities through the use of a new short-form registration statement. Like operating companies, affected funds will generally be eligible to use the short-form registration statement if they meet certain filing and reporting history requirements and have a public float of $75 million or more. These amendments are designed to allow affected funds to raise capital more efficiently and cost-effectively and provide affected funds with greater flexibility to manage the timing of their offerings in response to market opportunities.
Ability to Qualify for Well-Known Seasoned Issuer (WKSI) Status
Eligible affected funds will be able to qualify as WKSIs and benefit from the same processes available to operating companies that qualify as WKSIs. These include a more flexible registration process and greater latitude to communicate with the market. Like operating companies, affected funds will qualify as WKSIs if they meet certain filing and reporting history requirements and have a public float of $700 million or more. Allowing eligible affected funds to qualify for WKSI status will provide flexibility to those funds, including an ability to promptly tap favorable conditions in the public market, and may facilitate both capital formation and a reduction in the cost of capital for these funds.
Immediate or Automatic Effectiveness of Certain Filings
The amendments will expand the scope of rule 486 under the Securities Act of 1933 to registered closed-end funds or BDCs that conduct continuous offerings of securities, as defined under Commission rules. The amendments will permit these funds to make certain changes to their registration statements on an immediately-effective basis or on an automatically effective basis a set period of time after filing. Rule 486 currently applies only to closed-end funds that operate as “interval funds,” and these amendments will provide parity for other non-listed closed-end funds.
Communications and Prospectus Delivery Reforms
Affected funds will be able to use many of the communication rules currently available to operating companies, including the use of a “free writing prospectus,” certain factual business information, forward-looking statements, and certain broker-dealer research reports. Like operating companies, affected funds will be able to satisfy their final prospectus delivery obligations by filing their prospectuses with the Commission.
These amendments are designed to reduce regulatory costs while providing more timely information to investors.
New Method for Interval Funds and Certain Exchange-Traded Products to Pay Registration Fees
Instead of registering a specific amount of shares and paying registration fees at the time of filing, under the amendments, closed-end funds that operate as “interval funds” will register an indefinite number of shares and pay registration fees based on net issuance of shares. This approach is similar to that permitted for mutual funds and exchange-traded funds. The amendments also will allow continuously offered exchange-traded products that are not registered under the Investment Company Act to use a similar approach.
Periodic Reporting Requirements
To support the short-form registration statement framework, affected funds filing a short-form registration statement will be required to include certain key prospectus disclosure in their annual reports. In addition, affected funds filing a short-form registration statement will be required to disclose material unresolved staff comments. Registered closed-end funds also will be required to provide management’s discussion of fund performance (or MDFP) in their annual reports, similar to requirements that currently apply to mutual funds, exchange-traded funds, and BDCs.
Incorporation by Reference Changes
The registration form for affected funds currently requires a fund to provide new purchasers with a copy of all previously-filed materials that are incorporated by reference into the registration statement. The amendments will eliminate this requirement and instead require affected funds to make incorporated materials readily available on a website.
Structured Data Requirements
Affected funds will be required to tag certain registration statement information, similar to current tagging requirements for mutual funds and exchange-traded funds. BDCs also will be required to submit financial statement information, as operating companies currently do. Funds that file Form 24F-2 in connection with paying their registration fees, including mutual funds and exchange-traded funds (as well as interval funds under today’s amendments), will be required to submit the form in XML format.
What’s Next?
The rule and form amendments will become effective on Aug. 1, 2020, with the exception of the amendments related to registration fee payments by interval funds and certain exchange-traded products, which will become effective on Aug. 1, 2021.
In addition, the Commission is adopting compliance dates for certain requirements under the amendments to provide a transition period after the effective date of the final rule:
- The requirement for registered closed-end funds to provide MDFP in their annual reports to shareholders will have a compliance date of Aug. 1, 2021.
- Inline XBRL structured data reporting requirements for financial statement, registration statement information, and prospectus information will have a compliance date of Aug. 1, 2022 for affected funds that are eligible to file a short-form registration statement. For all other affected funds subject to these structured data reporting requirements, the compliance date is Feb. 1, 2023.
- The requirement that Form 24F-2 filers (including existing filers) file reports on Form 24F-2 in an XML structured data format will have a compliance date of Feb. 1, 2022.
Fintech is on an accelerated trajectory of investment, collaboration, and innovation. This pulse tracks the most significant developments in the sector, from high-profile investments to global platform expansions. Each update in this briefing serves as a key indicator of where the industry is headed.
1. European Fintechs Face Regulatory Pressures Amid New Investment Surge
The European fintech sector finds itself at a crossroads with increasing scrutiny and rising costs due to stringent regulations. While investments continue to flow into the continent’s financial technology companies, challenges in meeting new compliance requirements, especially around data privacy and cybersecurity, create a complex landscape for scaling. This tension between opportunity and operational limitations might affect European fintechs’ growth strategies.
Source: Financial Times
2. Shopify, Slack Founders Join Peter Thiel in Fintech Investment Push
Tobi Lütke of Shopify and Stewart Butterfield of Slack, along with investor Peter Thiel, have co-invested in a new fintech initiative that aims to bolster small business access to capital. By merging technology with a streamlined funding model, this new initiative targets underserved SMBs, highlighting a broader trend of high-profile tech leaders pivoting to fintech investment. The participation of Lütke and Butterfield signals increased cross-sector collaboration in fintech, bringing expertise from e-commerce and communication technology into the financial arena.
Source: Yahoo Finance
3. Lean Technologies Raises $67.5 Million to Drive Fintech Innovation in the Middle East
Riyadh-based fintech platform Lean Technologies recently secured a $67.5 million Series B investment round, aiming to expand its operations across the Middle East. This funding reflects growing investor interest in emerging markets and the potential of Middle Eastern fintech to bridge regional gaps in financial services access. As Lean Technologies broadens its service offerings, the funding will support further technological integration and scalability across financial ecosystems in the region.
Source: Fintech Global
4. Apollo Global Management Invests in Fintech for Private Offerings Support
Apollo Global Management has taken steps to enhance its services for private offerings by investing in specialized fintech solutions. This development signifies a growing trend among private equity firms to adopt fintech as a core component in their service expansion, particularly for personalized client services. Apollo’s strategy of integrating fintech solutions into private offerings marks a strategic shift toward digitalization within traditional financial sectors.
Source: Bloomberg
5. Juniper Research Names 2025’s Future Leaders in Fintech
Juniper Research has revealed its picks for the top future leaders in fintech for 2025. This list emphasizes innovation in fields such as AI, open banking, and decentralized finance, highlighting startups that exhibit potential for reshaping industry standards. As these up-and-coming firms push the boundaries of traditional finance, they exemplify the rising tide of next-generation financial technology poised to become industry mainstays.
Source: Globe Newswire
Conclusion
The convergence of seasoned tech giants with fintech, new funding rounds for region-specific platforms, and the rise of future industry leaders underscore the momentum of the fintech sector. Each of these stories reflects a broader narrative: fintech is not only diversifying in services but also rapidly integrating into traditional finance and tech, paving the way for a transformative era.
The post Fintech Pulse: Evolving Fintech Investments and Partnerships Signal Industry Transformation appeared first on HIPTHER Alerts.
In this edition of Fintech Pulse, we delve into groundbreaking announcements from the 2024 Hong Kong Fintech Week, spotlight strategic collaborations fostering financial accessibility, and examine significant profit growth in global fintech companies. Here’s our comprehensive breakdown of the latest happenings in fintech.
1. Bairong’s Full-Scenario AI Products Showcase at Hong Kong Fintech Week
Source: PRNewswire
At the 2024 Hong Kong Fintech Week, Bairong showcased its range of AI-driven solutions designed to support the digital transformation of financial institutions. Their new “full-scenario” suite aims to enhance data analysis, financial risk management, and credit scoring. The offering underscores Bairong’s strategic vision to advance financial decision-making with AI technology that serves a variety of sectors, including banking, insurance, and asset management.
This development aligns with broader industry trends emphasizing the power of AI to bridge operational gaps in traditional finance. Bairong’s solutions promise to optimize financial workflows, identifying high-risk factors in real-time. The commitment to developing comprehensive, adaptable AI tools demonstrates Bairong’s ambition to stay at the forefront of AI-powered fintech innovations.
2. SBI and APIX Establish Innovation Hub to Propel Fintech Partnerships
Source: The Paypers
SBI Holdings, Japan’s major financial services group, recently announced the launch of an Innovation Hub in partnership with APIX to advance fintech collaboration and innovation. The hub will serve as a catalyst for startups and financial technology firms to collaborate, leveraging APIX’s open innovation platform for API exchange.
Through this hub, SBI and APIX aim to address critical technological needs in the fintech sector. Startups and established firms can collaborate on new technologies and bring forward interoperable systems for the industry. This initiative marks a new phase in fintech alliances, where regulatory support and open innovation can accelerate fintech growth on a global scale.
3. Wise’s Record Profits Point to Growing Market Dominance
Source: MSN
British fintech giant Wise reported a 55% surge in profits, driven by an expanding customer base and increased market share. The company’s cross-border payment solutions are seeing widespread adoption, as it provides individuals and businesses with affordable currency exchange options, bypassing high fees associated with traditional banks.
Wise’s success underscores the current demand for transparent, low-cost international payments. As the firm continues to focus on product expansion and market penetration, its financial trajectory showcases how fintech firms can challenge the status quo in cross-border transactions, maintaining profitability while serving a rapidly growing user base.
4. Parker Secures $20 Million Series B Funding for Fintech Data Suite
Source: Forbes
Fintech startup Parker raised $20 million in a Series B funding round, with the goal of expanding its suite of financial data tools. Parker’s product range enables small and medium enterprises (SMEs) to gather and analyze data, facilitating more informed financial decisions. This funding reflects investor confidence in the need for specialized financial data tools tailored to SMEs, a sector often underserved in financial innovation.
By addressing the needs of smaller businesses, Parker is positioning itself as a key player in the niche market of financial data, which has typically been dominated by larger corporate-focused platforms. This funding round highlights the growing trend of venture capital backing for niche fintech solutions aimed at smaller, agile businesses.
5. The Payments Group and HubPeople’s Cash Payments Initiative for Online Daters
Source: PRNewswire
The Payments Group, a digital payments solution provider, announced a collaboration with HubPeople, an online dating platform, to integrate cash payment solutions for over 100 million users globally. This partnership aims to reach users who may not have access to traditional banking or prefer alternative payment methods.
The initiative points to the broader trend of payments inclusivity in fintech, whereby payment firms are making financial transactions more accessible for underserved communities. By integrating cash payment solutions, The Payments Group and HubPeople highlight the importance of flexibility in payment options, acknowledging the diverse financial preferences of users worldwide.
Industry Implications and Observations
These stories collectively reveal several key trends and insights about the evolving fintech landscape. The focus on AI, digital collaboration hubs, profitability through transparency, specialized data tools, and inclusive payment solutions are reshaping financial services. Fintech’s current trajectory indicates a robust push towards not only digital transformation but also inclusivity and global accessibility.
As financial technology continues to innovate, these advancements illustrate the increasing overlap between technology and finance, as well as the potential for fintech to foster inclusive growth. With companies like Bairong and Wise setting benchmarks for AI and cross-border payments, respectively, and emerging startups like Parker developing new, data-centric tools, fintech’s future promises a dynamic shift towards improved service and enhanced user engagement.
The post Fintech Pulse: Industry Innovations and Partnerships Drive Global Fintech Forward appeared first on HIPTHER Alerts.
In today’s dynamic fintech landscape, developments range from notable appointments to industry conferences, global ranking achievements, and the ongoing struggle between digital innovation and traditional cash reliance. This op-ed-style daily briefing dives into key updates and their potential impacts on the fintech industry, touching on politics, corporate shifts, and emerging trends.
1. Trump’s Potential Impact on Fintech: Policy Shifts and Market Reactions
As Donald Trump continues to be a central figure in U.S. politics, his stance on financial regulations and fintech could significantly influence the sector’s future. Historically, Trump has advocated for deregulation, which benefited banks and other financial services firms. His policies were known to relax certain compliance requirements, which made it easier for fintech companies to expand.
Under Trump’s administration, fintech firms might anticipate reduced regulatory constraints, particularly for newer sectors such as crypto and online lending. This relaxed stance could lower compliance costs for startups, allowing more resources to flow into technology and product innovation. However, a deregulated environment also increases the risk of market manipulation and consumer harm, raising concerns among advocates for tighter oversight.
The question remains whether a Trump-influenced regulatory environment would favor long-term fintech innovation or lead to an environment that could increase risks for both investors and consumers. As debates continue, fintech companies may need to be agile in adjusting to potential policy changes.
Source: Forbes
2. Hong Kong’s Love for Cash: Fintech Growth Stymied by Cultural Preferences
Hong Kong’s journey toward a cashless society faces a unique cultural hurdle—its residents’ affinity for cash, particularly among taxi drivers. Despite the proliferation of digital wallets and payment platforms in Asia, cash remains king in this metropolis. The attachment to cash among certain groups, especially cab drivers, poses a significant challenge for fintech companies aiming to promote mobile and digital payments in Hong Kong.
This resistance to cashless options highlights the complexities of fintech adoption, where technology alone cannot drive transformation without aligning with user behavior. For Hong Kong, overcoming this challenge may require fintech firms to develop hybrid solutions that incorporate cash with digital functionality or offer incentives for digital adoption. Until then, Hong Kong’s fintech ambitions will remain somewhat constrained by the cultural fondness for cash.
This preference for cash also has implications for Hong Kong’s broader economy. If the city cannot shift toward digital transactions, it may fall behind other financial hubs in terms of fintech innovation and integration.
Source: Bloomberg
3. Dave Inc. Joins the KBW Fintech Conference: Setting the Stage for New Partnerships
Next week, Dave Inc. is set to participate in KBW’s annual Fintech Conference, a major industry event in New York City. Scheduled for November 14, the conference will bring together industry leaders, investors, and innovators. Dave Inc.’s involvement underscores its ongoing commitment to establishing new partnerships and tapping into emerging fintech trends.
For Dave, a prominent U.S.-based neobank, participating in high-profile conferences like this not only enhances visibility but also presents networking opportunities with potential investors and partners. The company’s growth strategy focuses on making financial services more accessible and affordable for underserved communities. With industry leaders present, the conference may foster collaborative efforts, especially in areas such as lending, personal finance, and digital banking.
The KBW Fintech Conference could provide Dave Inc. with critical insights and alliances to further its mission, potentially accelerating product innovation and geographical expansion.
Source: GlobeNewswire
4. MeridianLink’s Recognition in IDC Fintech Rankings: A Boost in Reputation
MeridianLink has recently been recognized in IDC’s Global Fintech Rankings, securing a spot in the Top 50. This accolade acknowledges the company’s commitment to digital transformation within the financial services sector, where it focuses on providing cloud-based software solutions for banks, credit unions, and financial institutions.
Being named to this prestigious list elevates MeridianLink’s reputation within the fintech community. This recognition could help MeridianLink secure more significant contracts with major financial institutions, as industry recognition often leads to increased trust among potential clients. Additionally, this placement in the IDC rankings may serve as a strategic advantage when pursuing funding and partnerships in a competitive market.
This recognition is a testament to MeridianLink’s innovation in fintech, showing how its cloud-based solutions align with industry trends toward digital-first financial services.
Source: Business Wire
5. Leadership Change at Alliant Credit Union: Navigating Transition with New Interim CEO
Alliant Credit Union has named Ken Schaafsma as the interim CEO following the departure of Dennis Devine. Schaafsma, who was previously the CFO, will guide the organization through this transitional phase as it searches for a permanent CEO. Leadership changes in financial institutions often signal shifts in strategic focus or operational adjustments, and Schaafsma’s background in finance could mean an emphasis on fiscal discipline and profitability.
As a credit union with a significant member base, Alliant’s choice of leadership may influence its approach to digital services and customer engagement. With Schaafsma’s familiarity with the organization’s financial health, his interim tenure may bring stability during this transitional period.
In an industry undergoing rapid digital transformation, Alliant Credit Union’s ability to maintain a clear strategic vision and leadership stability will be crucial in keeping pace with fintech competitors.
Source: Fintech Futures
The post Fintech Pulse: The Latest Trends and Insights Shaping Fintech appeared first on HIPTHER Alerts.
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