Behavioural economic influences on primary market disclosure: The case of the EU regulation on European crowdfunding service providers

On 5 October 2020, as part of the Capital Markets Union (CMU) project, the European Parliament adopted, in second reading, Regulation (EU) 2020/1503 on European crowdfunding service providers for business (‘ECSP Regulation’). This Regulation, which shall apply as of 10 November 2021, consists of rules which aim at improving access to crowdfunding for EU businesses in need of capital, particularly start-ups, while, at the same time, providing a high level of protection to investors. To attain that it builds on three sets of measures: clear rules on information disclosures for project owners and crowdfunding platforms; rules on platform governance and risk management; and a coherent approach to supervision and enforcement. The focus of this article is on the disclosure-related set of provisions. Its aim is to demonstrate how the new rules embrace a more behavioural approach to primary market disclosure which, in contrast to the paradigm of full disclosure, focuses on the content, quality and framing of disclosure as an alternative means of enabling informed and, thus, allocatively efficient investment decisions. In a second step, it seeks to provide a preliminary evaluation of these measures both from a practical and a normative perspective