AUSTRIA Law and Practice Contributed by: Oliver Völkel and Philipp Ley, CERHA HEMPEL
aware that their responses directly influence the suitability of the investment recommendations. In addition, firms must explain what sources of infor - mation are used to generate advice. For example, whether the service relies solely on an online ques - tionnaire or also accesses other client data. • Crypto-assets: these fall outside the scope of MiFID II but are captured under MiCA. Business models offering robo-advice on crypto-assets must therefore comply with MiCA’s requirements. While MiCA establishes suitability obligations similar (but not identical) to those under MiFID II, robo-advisers need to adapt their systems to account for the higher risk profile and speculative nature of crypto- assets. In addition, MiCA includes specific rules that differ from those in MiFID II, which robo-advis - ers must carefully consider and implement. 3.2 Legacy Players’ Implementation of Solutions Introduced by Robo-Advisers Legacy financial institutions are increasingly adopt - ing robo-advisory technologies, often through hybrid models that combine digital advice with human over - sight. Key developments include the following. • Modular deployment: established players often integrate specific elements of robo-advice such as automated portfolio balances, digital onboarding or suitability assessments into existing discretion - ary portfolio management structures, rather than overhauling their entire business model. • Compliance automation: to meet MiFID II and MiCA requirements more efficiently, legacy firms are leveraging robo-adviser infrastructure to auto - mate parts of the suitability and product govern - ance processes. This includes the use of algo - rithms for assessing client preferences, including ESG considerations. • Partnerships: rather than building in-house, many legacy players acquire or partner with fintechs to speed up implementation and reduce time-to- market, while ensuring alignment with regulatory requirements. 3.3 Issues Relating to Best Execution of Customer Trades Best execution of customer trades remains a critical issue, particularly as robo-advisers handle a grow -
ing volume of client orders across traditional and digital assets. Several challenges and considerations emerge. These are as follows. • Execution quality monitoring: under MiFID II, firms must take all the necessary steps to obtain the best possible result for clients, considering price, costs, speed and likelihood of execution. Robo- advisers must embed these considerations into their algorithms and demonstrate ongoing monitor - ing, especially for less liquid assets like specific tokens. • Crypto-asset execution: for crypto-assets, best execution is more complex due to fragmented markets, limited reliable price discovery and high volatility. Robo-advisers must define clear execu - tion policies, including when and how they source prices from multiple execution venues, especially if some assets are only traded on unregulated exchanges. These policies must be disclosed to customers. • Automated routing and conflicts of interest: algo - rithms may default to specific execution venues or counterparties for efficiency or cost reasons, which may introduce conflicts of interest. Firms must identify and manage these in line with the applica - ble regulatory obligations. 4. Online Lenders 4.1 Differences in the Business or Regulation of Fiat Currency Loans Provided to Different Entities There are significant regulatory differences between loans to individuals and loans to small businesses or other entities. Loans to individuals are primarily gov - erned by consumer protection laws such as the Aus - trian Consumer Credit Act. The Mortgage and Real Estate Credit Act governs mortgage or real estate- related loans. These laws impose strict requirements on transparency, interest rate caps, creditworthiness assessments and the right of withdrawal. Loans to small businesses and other non-consumer borrowers are generally treated as commercial loans and are subject to less regulation (in particular, the requirements set out for consumers do not apply,
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