UNITED KINGDOM Law and Practice Contributed by: James Burnie, Kathryn Dodds, Olga Antonova and Nicky Androsov, gunnercooke llp
6.4 Listing Standards The requirement for listing standards very much depends on the nature of the securities exchange. There may be a requirement for a prospectus when selling certain securities – and at the other end of the spectrum, listing on a regulated market requires com - pliance with a detailed rulebook of requirements. In the context of crypto-assets, the FCA has published a discussion paper (DP24/4) setting out proposed requirements for disclosures when seeking to admit crypto-assets to exchanges so that they can be sold into the UK. These are currently high level; however, further detail is expected as the rules come into effect during the next year. 6.5 Order Handling Rules In relation to securities, order handling rules already exist. In broad and general terms, firms authorised to execute orders on behalf of clients must implement procedures and arrangements which provide for the prompt, fair and expeditious execution of client orders, relative to other orders or the trading interests of the firm. These procedures or arrangements must allow for the execution of otherwise comparable orders in accordance with the time of their reception by the firm. The requirements for an undertaking for a collective investment in a transferable securities (UCITS) man - agement company providing collective portfolio man - agement services are slightly different, as they must establish and implement procedures and arrange - ments in respect of all client orders they carry out which provide for the prompt, fair and expeditious execution of portfolio transactions on behalf of the UCITS scheme it manages. In relation to crypto-assets, whilst the rules do not yet exist, the direction of regulatory travel suggests that they should be formulated in the next year. 6.6 Rise of Peer-to-Peer Trading Platforms Peer-to-peer trading platforms are common in the United Kingdom, and are generally regulated (as they will involve an activity such as “making arrangements with a view to” a regulated transaction).
in-scope assets. This is therefore the activity most rel - evant to most fintechs, and there is a focus on how the firm conducts its business with users to ensure that they are appropriately protected, and receive appro - priate disclosures in respect of potential investments. 6.2 Regulation of Different Asset Classes Different asset classes have different regulatory regimes. Currently, crypto-asset exchanges are gener - ally subject to a different regime to that set out above, being one focused on stopping money laundering rather than a full conduct of business regime. Over the next year, this is expected to change as a new regime for crypto-asset businesses is being developed. Whilst the specifics are currently to be determined, it is clear that the new regime for crypto-asset exchanges will be heavily influenced by the traditional approach to securities regulation, with some differences reflecting the specifics of the crypto industry (for example, the nature and source of insider information in relation to a crypto-asset may be different to that which exists in relation to equity). 6.3 Impact of the Emergence of Cryptocurrency Exchanges The regulation of crypto-assets has traditionally been handled differently to other asset classes, in particu - lar by requiring registration with the FCA under the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017. The focus of this requirement has been on preven - tion of money laundering, rather than, for example, conduct of business and solvency. As a result, it has represented something of an anomaly within the broader UK regulatory framework. Furthermore, given the MLRs set out a separate regulatory regime to that which applies to securities, firms seeking to trade both securities and crypto-assets need both licences, which is very rare and has hindered the development of this industry. In the future, this is going to change as the MLRs are phased out, and the regulation of crypto-asset exchanges will deal with issues that are broader than money laundering risk; for example, there will be a focus on disclosure requirements, conduct of busi - ness and preventing market abuse.
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