Shearman & Sterling LLP | FinReg | UK Conduct Regulator Bans Sale to Retail Clients of Derivatives Referencing Crypto-Assets from January 2021
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  • UK Conduct Regulator Bans Sale to Retail Clients of Derivatives Referencing Crypto-Assets from January 2021
    10/06/2020
    The U.K. Financial Conduct Authority has published a Policy Statement and final rules prohibiting the sale, marketing and distribution to retail clients of derivatives and exchange traded notes referencing certain types of unregulated, transferable crypto-assets by firms acting in, or from, the U.K. The ban will apply from January 6, 2021.

    The prohibition will apply to the marketing, distributing or selling of crypto derivatives in, or from, the U.K. to retail clients by MiFID investment firms, MiFID optional exemption firms, U.K. branches of third-country investment firms and to EEA MiFID investment firms that currently passport into the U.K. and which will continue operating after the Brexit transitional period ends on January 1, 2021.

    The FCA states that it will focus its supervision on firms that inappropriately opt up retail clients to elective professional clients or move retail clients to non-U.K. entities. The rules apply to derivatives referencing crypto-assets, including contracts for difference, futures and options. Derivatives referencing crypto-commodities and central bank digital currencies are out of scope.

    Firms are not expected to close out retail clients' positions, unless a client makes such a request. Retail consumers may keep existing holdings until they choose to divest or close out those investments.

    View the FCA's Policy Statement and final rules.

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