By: Mike Castiglione, Director of Regulatory Affairs, Digital Assets, Eventus
The UK Treasury (HMT) published a consultation paper on February 1, 2023 to outline its thinking about expanding crypto regulations, such as applying elements of the Market Abuse Regulation (MAR) that covers other asset classes and to give crypto trading venues monitoring responsibilities. The HMT called for industry input by April 30 and said the policy paper “sets out proposals for this future regime and marks the next phase of the government’s approach to regulating cryptoassets.”
Because a “well-functioning and efficient financial market requires market integrity,” the HMT says there is a “strong case” for including a market abuse regime in a crypto regulatory framework. The proposal calls for a “shared understanding” about what is abusive trading. The government would have wide jurisdiction to pursue enforcement, as penalties for violations would apply to all persons trading on a UK venue “regardless of where the person is based or where the trading takes place.” The HMT proposal makes clear that trading venues would have the “primary responsibility” for “preventing, detecting and disrupting” market abuse.
Validus in Practice (ViP): Eventus has deep experience deploying our Validus Trade Surveillance software to crypto markets and against the list of manipulative behaviors outlined in the UK’s Market Abuse Regulation (MAR) that already apply to other asset classes, such as FX, equities, and derivatives. Even more, the HMT’s consultative paper lists specific examples of manipulative trading that Validus is built to monitor: layering, spoofing, front-running, insider dealing, and wash trading.
The UK Treasury notes “[t]here may be scope for collaboration between firms, regulators, and enforcement agencies to develop Regulatory Technology (RegTech) solutions to help detect, prevent and disrupt market abuse.” Eventus will watch for updates as UK regulators and lawmakers continue to formulate new rules governing cryptoassets, and we will be ready to help clients prepare for further developments.
About Eventus
Eventus is a leading global provider of multi-asset class trade surveillance and market risk solutions. Its powerful, award-winning Validus platform is easy to deploy, customize and operate across equities, options, futures, foreign exchange (FX), fixed income and digital asset markets. Validus is proven in the most complex, high-volume and real-time environments of tier-1 banks, broker-dealers, futures commission merchants (FCMs), proprietary trading groups, market centers, buy-side institutions, energy and commodity trading firms, and regulators. The company’s rapidly growing client base relies on Validus and Eventus’ responsive support and product development teams to overcome its most pressing regulatory challenges. For more, visit www.eventus.com.