EU Looks To CrowdInvesting To Plug Post-Brexit SME Capital Gap

The European Securities and Markets Authority (ESMA) has responded to an EU consultation on capital markets with a plea for the European Commission to focus on small businesses and investment-based crowdfunding; as well as more joined up regulatory supervision and more efficient collection of financial reporting data.

Recommendations include lighter information and reporting requirements for SMEs seeking to raise money; and EU regulation of crowd-investing to enable cross-border funding on a consistent basis.

ESMA says that only 10 of the 28 current EU member states reported the existence of regulated investment-based crowdfunding (in debt securities and equities/shares) in their territory - 99 platforms (up from 46 in 2014), of which 30 are based in the UK (up from 26 in 2014). France (23), Italy (17) and Germany (13) are fast followers. Only 12 platforms use a passport - based in either the UK or Finland (which has a total of 5 platforms). 

The various platforms are listed in the Appendix to the ESMA response. There is also a high level comparison of the various differences in terms of initial capital requirements; instruments and structures; remuneration models/levels and how these align with the interests of fundraisers/investors.

Volumes are not mentioned, but given that over half the platforms in 2014 were based in the UK, then it's likely they are still responsible for most of the volume. And the fact that ESMA bothers to push the sector at all suggests that those volumes are significant.

So this focus is not only an admission that Brexit creates a big and important capital-raising gap to fill, but it's also a big endorsement of the UK crowd-investment sector.  

The Great Reform Bill: #Brexit Stitch-Up Begins

Brexiteers moaned that the EU gave us too much red tape, and promised there would be less of it.

Now they introduce the deceptively titled "Great Reform Bill" which simply translates all the red tape into UK law. 

This 'gold-plating' is precisely how the UK has created a rod for its own back for decades.  In fact, it's busy doing the same thing with the new Payment Services Directive (PSD2).

EU courts do not intepret the law to the letter. They consider a law's purpose when applying it. 

But UK courts interpret UK law to the letter. 

UK courts are entitled to take a purposive interpretation to EU law, but tend not to do so once the EU law has been absorbed into UK law.  

So, the UK will actually have a worse form of red tape after Brexit than it does as an EU member.

May Commits Political Suicide

Well, I thought she would've U-turned, but there you have it. The UK's un-elected Prime Minister has pressed ahead with the Tories' plan to leave the EU without knowing the terms and in defiance of all danger signals.

Leave voters will be as quick as anyone to blame this cabal of Little Englanders for any bad news to follow, even though they knowingly sacrificed their economic future for illusions of 'border control' and 'sovereignty' that will disappear as quickly as the offer to spend "savings" of "£350m a week" on the NHS. 

No wonder the Tories are declining to call an early General Election!

Should Parliament Perpetuate The #Brexit Scam?

The Supreme Court judgment on the UK Government's plans to ignore the constitution is a good read. 

The Government's case was that "the 2015 [referendum] Act was enacted on the assumption that the result of the referendum would be decisive."  

Er, that's it.

That was plainly not the case, merely outrageous political positioning by the Brexiteers.

The Supreme Court judgment explains why the referendum could not be decisive (at paras 91-92) and why the 2015 referendum Act was flawed (at 118-119).  

Basically, if the Tories had wanted the Brexit referendum to be decisive (i.e. for Brexit to proceed immediately on a 'Yes' result), they would need to have included in the 2015 Act the detailed changes to the law to permit that to happen.  The 1975 EC referendum Act, for example, had no such details and was therefore properly presented by ministers at the time as being only advisory. They knew that more complex legislation had to follow if the UK were to join. Indeed, so did Cameron's government. The Supreme Court found that in 2011 the government had agreed with the proposition that "Under the UK’s [constitution] Parliament must be responsible for deciding... action in response to a referendum..." (see para 125).

Clearly, the Brexiteers concluded they had little chance of being able to frame the necessary detailed legislation to leave the EU, and just wanted to snatch a quick result. So they decided to copy the original 'simple' EC referendum Act of 1975 and claim (however wrongly) that the referendum on this occasion would be decisive. Others clouded that issue by 'promising' to abide by the outcome, even though the referendum result could only have political significance, rather than any legal status. They then drove around in their big red bus, blithely misleading people about the alleged benefits, and dismissing expert analysis of the major problems associated with leaving the EU.  No doubt they did this in part to secure their own electoral future(s), but you can tell from where they are now that the lead Brexiteers were not roundly congratulated by their Tory colleagues for their conduct and its consequences.  As the Supreme Court noted (at para 124):

"...the referendum of 2016 did not change the law in a way which would allow ministers to withdraw the United Kingdom from the European Union without legislation... unless and until acted on by Parliament, its force is political rather than legal."

The question now is whether Parliament should perpetuate the scam. 

There is much hand-wringing about the 'will of the people' (well, 52% of them, anyway) but little apparent appetite among MPs for recognising that the 48% were not fully informed and calling a halt to plans to trigger Article 50 unless and until the government can explain the detail.  MPs are best at ducking issues, not addressing them.

But the fact that Brexit continues to divide the country should tell them all they need to know: when in doubt, don't do it.  They might vote it through, but no one will thank them for the consequences.

Meet The Schadenfreuders

As the majority of voters in the western liberal democracies - ironically labelled the "liberal elite" - work their way along the 'change curve' after shocks like Brexit and the rise of Corbyn, Trump and others, their initial shock, denial, anger and blame is giving way to resignation and acceptance... and with it a little pleasure at the growing misfortunes of the 'winners'.

I'm the first to admit that the premise of "Lipstick on a Pig" was that 'people power' would be wielded more wisely than the power of the institutions they topple.  Yet I also pointed out that we are badly short of scepticism, that democracy should be a messy process, and that greed and stupidity are still winning. Pragmatism, after all, is not a destination but represents the constant struggle of "intelligent practice versus uninformed, stupid practice".

So it's all part of the familiar trends toward greater personal control that the Brexiteers can't agree what Brexit means; Corbyn is not proving the electoral champion that his supporters had believed; and Trump has had to concede that the US will in fact pay for any 'Wall' along its southern border, in the hope that Mexico will pay later... 

In other words, the recent populist 'victories' have merely wrung the same old institutional failings out of the same old political parties. And those who fell for the latest examples of 'stupid practice' will need to learn that lesson before we will begin to see the triumph of intelligent practice from genuine 'facilitators'. 

The question is how many more opportunities for schadenfreude there will be in the meantime...

I love the Germans. They've got a word for everything (as Nigel Farage will surely know).