UK Law and Practice Contributed by: James Burnie, Kathryn Dodds, Olga Antonova and Holly Joseph, gunnercooke llp
6. Marketplaces, Exchanges and Trading Platforms 6.1 Permissible Trading Platforms The nature of the regulation of a marketplace is dependent on the way in which it is set up and the nature of the asset traded. With respect to the trading of regulated finan - cial instruments (which does not include crypto- assets), the most regulated markets are regu - lated markets, followed by multilateral trading facilities, organised trading facilities and firms “making arrangements with a view to” transac - tions. Regulated markets include entities such as the London Stock Exchange, with onerous specific listing rules for firms wishing to trade on those exchanges. Multilateral trading facilities have to operate in accordance with non-discretionary rules, where - as order execution must be carried out on an organised trading facility (OTF) on a discretion - ary basis. The activity of “making arrangements with a view to” transaction is the most light-touch, and gen - erally applies to firms that connect buyers and sellers of in-scope assets. This is therefore the activity most relevant 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 appropriate 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 generally subject to a different regime to that set out above, being one focussed on stop -
how the funds are on-lent) or deposit-taking (if there is no look-through to how the funds are on- lent). The issues therefore depend on the nature of the activity; for example for a collective invest - ment scheme there is an emphasis on ensuring that the funds are properly managed and that the fund management activity is properly overseen. On the other hand, the focus on deposit-taking tends to be as regards ensuring that the risk of solvency of the institution is properly managed. 4.4 Syndication of Fiat Currency Loans Syndication of loans does take place. Outside of the scenarios set out in 4.3 Sources of Funds for Fiat Currency Loans , this is generally unregulat - ed and as such there is no specific legal practice. However, there are usually commercial norms, for example there tends to be a lead lender who organises the syndicate and is the primary entity performing due diligence. 5. Payment Processors 5.1 Payment Processors’ Use of Payment Rails Generally, payment processes need to use a payment rail in order to operate. 5.2 Regulation of Cross-Border Payments and Remittances The provision of cross-border payments and remittances from abroad are generally unregu - lated, if there is no UK establishment. The provision of cross-border payments and remittances from the UK to other countries is generally regulated the same way as payment services generally – however there are some dif - ferences in terms of operational aspects, such as the allowed settlement time for payments.
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