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IOSCO Reports on Crypto-Asset Trading Platforms

On February 12, the International Organization of Securities Commissions (IOSCO) published its final report on “Issues, Risks and Regulatory Considerations Relating to Crypto-Asset Trading Platforms (CTPs)” (the Final Report). The Final Report follows a consultation paper IOSCO published in May 2019 (for more information, please see the June 14, 2019 edition of Corporate & Financial Weekly Digest).

In the Final Report, IOSCO defines a CTP as a “facility or system that brings together multiple buyers and sellers of crypto-assets for the purpose of completing transactions, or trades.”

Since IOSCO members are national securities regulators, the purpose of the Final Report is to provide these regulators with a toolkit to use when assessing and regulating CTPs. The Final Report is split into seven areas of focus, and, at the end of each area, IOSCO provides a list of questions to ask or elements to assess. The seven areas are:

  • Access to CTPs (focusing on access criteria and participant on-boarding)

  • Safeguarding Participants’ Assets (such as custody models and wallets for crypto-assets)

  • Conflicts of Interest (and the impact of conflicts on investor protection and market efficiency)

  • Operations of CTPs (specifically, whether operational information is available to the public)

  • Market Integrity (such as trade monitoring to detect and prevent fraud)

  • Price Discovery (including pre- and post-trade transparency); and

  • Technology (focusing on systems resilience).

In the Final Report, IOSCO identifies certain IOSCO Principles, which apply to CTPs,. For example, IOSCO Principle 33 states, “The establishment of trading systems including securities exchanges should be subject to regulatory authorization and oversight.” IOSCO also uses the report to highlight the importance of cross-border information sharing and of “efficient and reliable clearing and settlement.”

The Final Report is available here.

©2020 Katten Muchin Rosenman LLP

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John Ahern, Financial Attorney, London, Katten Law Firm
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John Ahern, partner at Katten Muchin Rosenman UK LLP and head of the London Financial Services group, focuses his practice on banking, financial services, UK and European financial markets, and related regulations. His background in private practice and as in-house counsel at a global investment bank provides him with perspective on the unique regulatory issues facing the wholesale and private banking sectors. John advises multilateral trading facilities, broker-dealers and banks on trading, clearing and settlement as well as custody of securities—both physical and...

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Carolyn H. Jackson, International Attorney, Katten Muchin law firm
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Carolyn Jackson is a partner in Katten Muchin Rosenman UK LLP and is a Registered Foreign Lawyer. She provides US financial regulatory legal advice to a broad range of market participants, including commercial banks, investment banks, investment managers, broker-dealers, electronic trading platforms, clearinghouses, trade associations and over-the-counter derivatives service providers.

Carolyn guides clients in the structuring and offering of complex securities, commodities and derivatives transactions and in complying with US securities and commodities laws and regulations. 

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Nathaniel Lalone, Katten Muchin Law Firm, Financial Institutions Attorney
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Nathaniel Lalone, a partner at Katten Muchin Rosenman UK LLP, has a broad range of experience in the regulation of financial products and financial markets, and frequently provides regulatory and compliance advice to trading venues, clearing houses and buy-side firms active in the over-the-counter (OTC) derivatives, futures and securities markets. He is actively involved in advising clients on the implementation of MiFID 2 and MiFIR in the European Union as well as the international reach of US financial services regulation. He also has significant experience with structuring...

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Neil Robson, private equity fund managers counselor, Katten Law Firm, London
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Neil Robson, a regulatory and compliance partner with Katten Muchin Rosenman LLP, focuses his practice on counseling hedge and private equity fund managers and other investment advisers on operational, regulatory and compliance issues. He regularly addresses Financial Conduct Authority (FCA) and EU authorization and compliance under both the EU Alternative Investment Fund Managers Directive (AIFM Directive) and MiFID, cross-border issues in the financial services sector, market abuse, anti-money laundering and regulatory capital requirements, formations and buyouts of...

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