Tuesday, November 30, 2021

FCA’s ban on crypto-derivatives opposed by World Federation of Exchanges

The Takeaway:

The World Federation of Exchanges(WFE) has asked the UK's Financial Conduct Authority(FCA) not to ban crypto-derivative sales to retail customers completely. FCA proposed the ban of crypto-derivatives sales entirely. WFE said that consumer safety is the priority, and a crypto-derivatives ban would cause damage to regulated exchanges and central counterparties(CCPs) who work with the regulators. They provide pre- and post-trade risk management standards.

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UK’s Financial Conduct Authority(FCA) recently opened a consultation to protect investors who are looking to buy crypto-related futures, options, and contracts. To help with this, the regulating authority proposed a complete ban of crypto-derivates stating that such means of investments are ill-served to retail customers. These retail customers cannot assess the value and risks involved in the derivatives.

FCA stated that if they ban the crypto-derivatives, the potential benefit to the consumers by banning these products will range from £75 million to £234.3 million a year. Christopher Woolard, the executive director of strategy and competition in FCA, mentioned that the prices are incredibly volatile, and consumers can’t rely on these unregulated crypto assets.

World Federation of Exchanges(WFE) on reading this suggested that a complete ban on crypto derivatives would envelop regulated exchanges and central counterparties that help with pre and post-trade risk management standards. Chief Executive Officer of WFE, Nandini Sukumar, said that consumer protection is most important when they are looking for new innovative products.

All the infrastructures that adhere to strict regulatory requirements make the consumer protection a part of their system. They understand the importance of these products and how the best way to support the marketplace is by being a part of a well functioning market.

WFE was formerly known as Federation International des Bourses de Valeurs, or the International Federation of Stock Exchanges is a publicly regulated stock, futures, and options exchanges association. It was founded in 1961 and is headquartered in London. Its members include the London Stock Exchange, Deutsche Boerse, Euronext CME Group, and the Shanghai Stock Exchange.

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Disclaimer: The article reflects the opinions of the author and is not representative of Chaintimes’ views.
The article does not offer any investment advice. User discretion is advised when investing in or trading with cryptocurrency. Extensive and diligent research should be carried out by the reader before making a decision.

Harry Finnerty
Harry Finnerty
After completing his graduation from Strayer University, Harry started to work in the real estate industry. However, soon he realized that his real interest is in the financial industry and once he came to know about bitcoin and the technology behind it, he dedicated his life to understand and write about it.

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