Featured Product

    FCA Proposes Ban on Sale of Crypto-Derivatives to Retail Consumers

    July 03, 2019

    FCA is proposing rules to address harm to retail consumers from the sale of derivatives and exchange-traded notes referencing certain types of crypto-assets. The consultation proposes to ban the sale, marketing, and distribution to all retail consumers of all derivatives (that is, contract for difference, options, and futures) and exchange-traded notes that reference unregulated transferable crypto-assets by firms acting in, or from, the UK. This consultation fulfills the FCA commitment in the UK Cryptoasset Taskforce Final Report to explore a potential ban. The consultation period ends on October 03, 2019. In case FCA decides to proceed with the final rules, it intends to publish a final policy statement and Handbook rules in early 2020.

    FCA considers these products are ill-suited to retail consumers that cannot reliably assess the value and risks of derivatives or exchange-traded notes that reference certain crypto-assets (crypto-derivatives). This is due to the:

    • Inherent nature of the underlying assets, which have no reliable basis for valuation
    • Prevalence of market abuse and financial crime in the secondary market for crypto-assets (for example, cyber theft)
    • Extreme volatility in crypto-asset prices movements
    • Inadequate understanding by retail consumers of crypto-assets and the lack of a clear investment need for investment products referencing them

    These features mean retail consumers might suffer harm from sudden and unexpected losses if they invest in these products. In January 2019, FCA also consulted on a guidance on crypto-assets (CP19/3) to clarify what types of crypto-assets fall within the current regulatory perimeter; the consultation closed on April 05, 2019. FCA expects to publish the final guidance on crypto-assets later in the summer and has reflected feedback to that consultation in the proposals for crypto-derivatives. This consultation will be relevant for firms issuing or creating products referencing crypto-assets; firms distributing products referencing crypto-assets, including brokers and investment platforms, and financial advisers; firms marketing products referencing crypto-assets; operators of trading venues and platforms; and retail consumers and consumer organizations

     

    Related Links

    Comment Due Date: October 03, 2019

    Keywords: Europe, UK, Banking, Securities, Crypto-Assets, Crypto-Derivatives, Exchanged-Traded Notes, FCA

    Related Articles
    News

    APRA Revises Standard on Margin Rules for Uncleared Derivatives

    APRA revised CPS 226, which is the prudential standard on margin and risk mitigation requirements for non-centrally cleared derivatives.

    September 19, 2019 WebPage Regulatory News
    News

    SEC Adopts Rules and Amendments Under Regulatory Regime for Swaps

    SEC announced that it took a significant step toward establishing the regulatory regime for security-based swap dealers (SBSDs) by adopting a package of rules and rule amendments under Title VII of the Dodd-Frank Act.

    September 19, 2019 WebPage Regulatory News
    News

    FCA Welcomes ISDA Protocol on Narrowly Tailored Credit Events

    FCA published an update to its initial joint statement with the U.S. SEC and CFTC on opportunistic strategies in the credit derivatives markets.

    September 19, 2019 WebPage Regulatory News
    News

    PRA Issues Consultation on Prudent Person Principle Under Solvency II

    PRA, via the consultation paper CP22/19, has set out its proposed expectations for investment by firms, in accordance with the Prudent Person Principle (PPP).

    September 18, 2019 WebPage Regulatory News
    News

    PRA Proposal on Probability of Default and LGD Estimation

    PRA proposed, via the consultation paper CP21/19, an approach to implementing EBA’s recent regulatory products relating to Probability of Default (PD) estimation, Loss Given Default (LGD) estimation, and the treatment of defaulted exposures in the internal ratings-based (IRB) approach to credit risk.

    September 18, 2019 WebPage Regulatory News
    News

    BIS Formalizes Agreement to Set Up Innovation Hub in Hong Kong SAR

    BIS and HKMA signed the Operational Agreement on the BIS Innovation Hub Center in Hong Kong Special Administrative Region (SAR).

    September 18, 2019 WebPage Regulatory News
    News

    APRA Observations from Thematic Review on Recovery Plans of Insurers

    APRA issued a letter to general insurers and life insurers, outlining observations from a recent thematic review on recovery planning by insurers.

    September 18, 2019 WebPage Regulatory News
    News

    BNM Publishes Financial Stability Review for the First Half of 2019

    BNM published Financial Stability Review for the first half of 2019.

    September 18, 2019 WebPage Regulatory News
    News

    CFTC Extends Comment Period for Proposals on Cross-Border Clearing

    CFTC announced that it is extending, until November 18, 2019, the comment period for the proposal for an alternative compliance framework for derivatives clearing organizations (DCOs) that are organized outside of U.S. and that do not pose substantial risk to the U.S. financial system.

    September 18, 2019 WebPage Regulatory News
    News

    FASB Issues Summary of Tentative Board Decisions at September Meeting

    FASB published a summary of the tentative decisions taken at its Board meeting in September 2019.

    September 18, 2019 WebPage Regulatory News
    RESULTS 1 - 10 OF 3849