FRANCE Law and Practice Contributed by: Hubert de Vauplane and Hugo Bordet, Morgan Lewis & Bockius LLP
structuration of global platforms – with an off - shore company operating the global platform order book and an EU entity acting as a broker – would not be possible. Finally, the ESMA’s position raises a key ques - tion for the future of trading platforms for cryp - to-assets: how will they adapt to the require - ments of MiCAR? Two main options appear to be under consideration. The first is to create a separate platform dedicated exclusively to the EU, which could lead to liquidity fragmentation, making trades less efficient and potentially less attractive to investors. The second option would be to relocate the platform’s headquarters (and therefore its order book) to the EU, enabling the centralisation of operations and compliance with European regulations. However, this second option seems unlikely, as it would require sig - nificant investments and a complete restructur - ing of the platform’s global infrastructure. There - fore, global platforms will need to find a balance between regulatory compliance within the EU and maintaining their global business model. 6.4 Listing Standards French law requires trading venue operators to have clear and transparent rules regarding the criteria used to determine which financial instruments may be traded within their system. In addition, the rules of a regulated market must provide for fair, orderly and efficient trading of the financial instruments. Concerning the listing standards themselves, each trading venue operator establishes its own rules. However, these rules generally rely on the compliance of the issuer of the financial instrument with the relevant provisions of Euro - pean and national law. Certain specific rules may also be set by the operators themselves. For example, concerning the minimal percent -
age of float, Euronext’s rules provide that, at the time of admission to listing, at least 25% of the subscribed capital represented by the class of securities concerned must be distributed to the public. 6.5 Order Handling Rules Order handling rules applicable in France arise from Delegated Regulation (EU) 2017/565 of 25 April 2016 and a section of the French Monetary and Financial Code. Pursuant to the delegated regulation, investment firms carrying out client orders must ensure that orders executed on behalf of clients are promptly and accurately recorded and allocated. ISPs must execute cli - ent orders sequentially and promptly, unless the characteristics of the order, the prevailing market conditions or the interests of the client require otherwise, and they must inform retail clients promptly about any material difficulty. Pursuant to the French Monetary and Financial Code, ISPs are subject to an obligation to reach the best possible result when executing a cli - ent’s order (also called the “best execution” obli- gation). “The best possible result” depends on various parameters, including the price of the financial instrument, the cost of the order, the size of the order, etc. With respect to retail cli - ents, the best possible result primarily depends on the aggregate cost of the order. In addition, ISPs must set out and communi - cate to their clients an order’s execution policy, which describes how orders are executed by the intermediary. 6.6 Rise of Peer-to-Peer Trading Platforms The rise of peer-to-peer crypto-asset trading platforms does not yet appear to have affected the regulation of trading venues. French and
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