FRANCE Law and Practice Contributed by: Hubert de Vauplane and Hugo Bordet, Morgan Lewis & Bockius LLP
emission allowances, derivatives and physi - cally-settled wholesale energy products. • OTFs may match buying and selling orders in accordance with discretionary rules, while regulated markets and MTFs must use non- discretionary rules. Finally, with respect to marketplaces, no specific regulatory regime generally applies. Marketplac - es may be regulated to the extent that they allow their clients to purchase or trade products which are subject to a regulation. 6.2 Regulation of Different Asset Classes With respect to the listing on trading platforms, not all asset classes are subject to the same regime. The relationship between regulated trad - ing platforms and asset classes may be broadly presented as follows: • any financial instrument may be listed on a regulated market or an MTF; and • an OTF may only list the following asset classes: debt securities, structured finance products, greenhouse gas emission allow - ances, derivatives and physically-settled wholesale energy products. With respect to the Market Abuse Regulation (Regulation (EU) No 596/2014 on market abuse), which establishes a common regulatory frame - work on insider dealing, the unlawful disclosure of inside information and market manipulation, all financial instruments are subject to its provi - sions, whether they are traded on a regulated market, an MTF or an OTF. 6.3 Impact of the Emergence of Cryptocurrency Exchanges The French regulation applicable to financial instruments’ trading platforms has not yet been impacted by the emergence of cryptocurrency
exchanges. As financial instruments may not be listed on cryptocurrency exchanges for the time being, they remain outside the scope of regula - tion of traditional financial products. Since the PACTE Act came into effect, digital asset service providers operating a cryptocur - rency exchange must register with the AMF, which means that they notably have to comply with the AML regulation. In addition, cryptocur - rency exchanges which allow their clients to trade cryptocurrencies against legal currency need to either obtain payment service provider status or partner with a payment service provider to handle the legal currency flows. Finally, cryptocurrency exchanges can obtain an optional licence which provides extended rights to market their services in France. This optional licence comes with additional obligations, which are broadly similar to those of ISPs (ie, relating to reporting, transparency, conflicts of interest, etc). Under MiCAR, operating a crypto-asset trad - ing platform now requires approval as a CASP, which imposes stricter requirements, including detailing the platform’s operating rules, com - plying with AML-CFT regulations, market abuse regulations and prudential capital requirements, and others. Before MiCAR, third-country platforms could solicit EU clients by establishing a regulated subsidiary in an EU Member State that acted as a broker to the global platform (usually based in an offshore third country). However, in July 2024, the ESMA clarified that this model could lead to non-compliance with rules on reverse solici - tation, conflicts of interest and best execution, warning against attempts to exploit regulatory loopholes. With the MiCAR regime in place, this
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