Study On Legal Regulation Of Robo-advisor

After the outbreak of the financial crisis,FinTech,abbreviation of Financial Technology,has taken the world by storm.Various new technology in field of finance,such as big data,artificial intelligence,block chain and distributed account has experienced explosive growth.The combination of these new technology and finance gave birth to new financial consumption patterns and thus overturn the traditional financial system.This trend also brings opportunities for developing countries.Compared with developed countries with mature financial industry,the financial system,business mode and consumer habits of developing countries and regions are easier to be changed.China has become an important participant in the wave of financial science and technology.It has produced a number of leading financial technology companies,such as Ant Financial,Qudian,Webank and so on.In the field of financial and technology,the combination of artificial intelligence and finance becomes a sought-after issue.Robo-advisor is becoming one of the most promising areas.As the name implies,Robo-advisor is the combination of artificial intelligence technology and traditional financial investment adviser.It uses artificial intelligence technology instead of human consultant.And use algorithm automatically to offer investment advice and asset management services for clients.Robo-advisor stems from the United States.On the one hand,the financial crisis makes the public lose trust on traditional financial institutions.On the other hand,big data,artificial intelligence technology develop rapidly.Against this background,many intelligent investment company appeared such as Betterment and Wealthfront.In addition to the industry of United States,that of other countries also grew rapidly.Many participantsappear such as the Nutmeg in UK,Stockspot Co.in Australia and Ginmon Co.in Germany.There are as well many participants in China.Such as Licaimofang,Jingdong,Gold Beta,and Capricorn Investment.Although Robo-advisor has advantages like low thresholds,low charged fees,there are particular risks of automation.First it has its own technical risk,including the defects of internal algorithm,external network risk and operation risk.Second,it expands the market risk.In particular,it introduces high-risk customers,strengthen the "herd" effect and market resonance.Third,it leads to new legal risks.Running Robo-advisor creates challenge to faith obligations and algorithm creates challenge for regulation means.These risks of Robo-advisor have caught the attention of regulators,who have taken more targeted regulatory action against it.the U.S.Securities and Exchange Commission released IM Guidance Update upon Robo-advisors,which points out that the Robo-advisor as a registered investment advisor meets the requirement of fiduciary duty and other substance standards regulated by U.S.investment company regulation of 1940.The Australian Securities and Investments Commission has released a regulatory guide(Regulatory Guide 255:Providing Digital Financial Product Advice to Retail Clients).The Financial Conduct Authority in UK has set up Advice Unit to provide separate regulatory feedback and general regulatory guidance for Robo-advisor.China's securities regulatory commission has also noticed the regulatory issues of robo-advisor.However,the positioning and regulatory requirements of robo-advisor are still unclear.And the domestic robo-advisor business faces significant policy risks.The first problem is the qualitative of robo-advisor.Domestic robo-advisor is facing three alternative directions: investment advisor,sales assistant and asset management.The second problem is that investment for clients is prohibited in investment advice industry in China.Thus,the robo-advisor cannot play the core function of account management.In order to promote the healthy and orderly development of domestic robo-advisor,the domestic institutional barriers should be broken through.The regulator should carry out penetrative examination of the robo-advisor platform.And figure out attributes of the platform according to the business nature.Secondly,the account management business of investment advisors should be gradually open by using the financial pilot.Besides the supervision,technology can as well be used to improve the supervision ability.Thirdly,it is necessary to clarify the fiduciary duties of robo-advisor and establish the informationdisclosure system to protect investors' right to know and safeguard the interests of investors.Finally,it is necessary to strengthen investor education and improve investor's self-protection ability.