ESMA has decided to postpone the decision on whether to extend the scope of MAR to spot FX contracts.
Foreign Exchange ('FX') trading activities constitute one of the largest markets in the world, worth billions of euros every day. However, the FX market remains the least regulated and opaque of all financial markets, in which FX rates that influence the value of billions of Euros of assets, and investments are allowed to be set by a few firms and individuals.
In September 2013, the European Commission (the 'Commission') started investigating several banks operating in the foreign exchange market for breaches of EU anti-trust rules, in particular Article 101 of the Treaty on the Functioning of the European Union and Article 53 of the EEA Agreement that prohibits cartels and other restrictive business practices. In May 2019, in two settlement decisions, the Commission fined five banks more than Euro 1 billion for participating in spot FX trading cartel for 11 currencies.
The Commission's investigation revealed that some individual traders in charge of FX trading of these currencies on behalf of the relevant banks exchanged sensitive information and trading plans, and occasionally
coordinated their trading strategies through various online professional chatrooms. The infringements occurred between December 2007 and January 2013.
The Commissioner in charge of competition policy, Margrethe Vestager, said that: “these cartel decisions send a clear message that the Commission will not tolerate collusive behaviour in any sector of the financial markets. The behaviour of these banks undermined the integrity of the sector at the expense of the European economy and consumers.”
The Market Abuse Regulation (MAR), which applied from 3 July 2016, contains a review clause requiring the Commission to present a report to the European Parliament and the Council to assess various provisions of MAR. The scope of application of MAR as defined by Article 2 does not include spot FX contracts.
Given the size of the spot FX market and the issues being encountered, the Commission mandated ESMA to consider whether there is a need for that market to be covered by the market abuse regime, whether the national competent authorities have the necessary regulatory tools to effectively and efficiently supervise and sanction market abuse on spot FX markets and whether extending the scope of MAR to these markets would prove to be the most appropriate way of remedying supervisory gaps if any exist.
On 23 September 2020, following a public consultation, ESMA published its final recommendations in its MAR Review report. ESMA took several factors into consideration like the possible regulatory gap due to the absence of regulatory coverage in the EU, the structural changes needed, particularly the transparency and conduct requirements, and the reporting obligation under MiFID II/MiFIR. Key concepts of MAR would also need to be adjusted, for example, the definition of the ‘issuer’ for spot FX contracts. Additionally, special care would need to be given on the coordination required between the EU and other jurisdictions concerning the exchange of information.
ESMA settled on its final view, taking into account the size of the spot FX market together with its global nature and peculiarities and the number of concepts that would need to be revised in the context of spot FX markets, as well as the required revision of MiFID II and MiFIR. A sound cost-benefit analysis was deemed appropriate before deciding on a future EU regulatory framework due to the structural changes that it would imply.
ESMA specifically considered the regulatory gap between MAR and the FX Global Code of Conduct (the 'FX Global Code'), the global principles of good practice standards in the foreign exchange markets developed in 2015 between central banks and market participants. The FX Global Code is currently being reviewed to ensure that its guidance remains appropriate and is contributing to an effectively functioning market. The review is due to be completed by mid-2021.
ESMA has, for the time being, decided to postpone the decision on whether to extend the scope of MAR to spot FX contracts. ESMA concluded that further analysis should be undertaken on the suitability of setting-up an EU regulatory regime on market abuse for spot FX contracts, taking into account the FX Global Code currently under revision and involving the central banks, who contributed extensively to the FX Global Code. ESMA also noted, that considering the global nature of this market, global coordination with the other main jurisdictions in developing such a regulatory framework would also be required.
Alexandros Constantinou is Compliance Director at MAP FinTech.
Foreign Exchange ('FX') trading activities constitute one of the largest markets in the world, worth billions of euros every day. However, the FX market remains the least regulated and opaque of all financial markets, in which FX rates that influence the value of billions of Euros of assets, and investments are allowed to be set by a few firms and individuals.
In September 2013, the European Commission (the 'Commission') started investigating several banks operating in the foreign exchange market for breaches of EU anti-trust rules, in particular Article 101 of the Treaty on the Functioning of the European Union and Article 53 of the EEA Agreement that prohibits cartels and other restrictive business practices. In May 2019, in two settlement decisions, the Commission fined five banks more than Euro 1 billion for participating in spot FX trading cartel for 11 currencies.
The Commission's investigation revealed that some individual traders in charge of FX trading of these currencies on behalf of the relevant banks exchanged sensitive information and trading plans, and occasionally
coordinated their trading strategies through various online professional chatrooms. The infringements occurred between December 2007 and January 2013.
The Commissioner in charge of competition policy, Margrethe Vestager, said that: “these cartel decisions send a clear message that the Commission will not tolerate collusive behaviour in any sector of the financial markets. The behaviour of these banks undermined the integrity of the sector at the expense of the European economy and consumers.”
The Market Abuse Regulation (MAR), which applied from 3 July 2016, contains a review clause requiring the Commission to present a report to the European Parliament and the Council to assess various provisions of MAR. The scope of application of MAR as defined by Article 2 does not include spot FX contracts.
Given the size of the spot FX market and the issues being encountered, the Commission mandated ESMA to consider whether there is a need for that market to be covered by the market abuse regime, whether the national competent authorities have the necessary regulatory tools to effectively and efficiently supervise and sanction market abuse on spot FX markets and whether extending the scope of MAR to these markets would prove to be the most appropriate way of remedying supervisory gaps if any exist.
On 23 September 2020, following a public consultation, ESMA published its final recommendations in its MAR Review report. ESMA took several factors into consideration like the possible regulatory gap due to the absence of regulatory coverage in the EU, the structural changes needed, particularly the transparency and conduct requirements, and the reporting obligation under MiFID II/MiFIR. Key concepts of MAR would also need to be adjusted, for example, the definition of the ‘issuer’ for spot FX contracts. Additionally, special care would need to be given on the coordination required between the EU and other jurisdictions concerning the exchange of information.
ESMA settled on its final view, taking into account the size of the spot FX market together with its global nature and peculiarities and the number of concepts that would need to be revised in the context of spot FX markets, as well as the required revision of MiFID II and MiFIR. A sound cost-benefit analysis was deemed appropriate before deciding on a future EU regulatory framework due to the structural changes that it would imply.
ESMA specifically considered the regulatory gap between MAR and the FX Global Code of Conduct (the 'FX Global Code'), the global principles of good practice standards in the foreign exchange markets developed in 2015 between central banks and market participants. The FX Global Code is currently being reviewed to ensure that its guidance remains appropriate and is contributing to an effectively functioning market. The review is due to be completed by mid-2021.
ESMA has, for the time being, decided to postpone the decision on whether to extend the scope of MAR to spot FX contracts. ESMA concluded that further analysis should be undertaken on the suitability of setting-up an EU regulatory regime on market abuse for spot FX contracts, taking into account the FX Global Code currently under revision and involving the central banks, who contributed extensively to the FX Global Code. ESMA also noted, that considering the global nature of this market, global coordination with the other main jurisdictions in developing such a regulatory framework would also be required.
Alexandros Constantinou is Compliance Director at MAP FinTech.
StoneX’s Q2 FX and CFDs Revenue Jumps despite Trading Volume Drop
Network, Learn, Grow | FMAS:24
Network, Learn, Grow | FMAS:24
Get ready to mark your calendars for FMAS:24, returning this May! Take a quick glimpse of what awaits at the Sandton Convention Centre in Sandton, South Africa from May 20-22, 2024.
Don't miss out on this 5-second invite packed with energy and urgency!
Secure your free ticket now 🔗 https://events.financemagnates.com/yQx0l?utm_source=youtube&utm_campaign=fmas-is-back&utm_medium=video&RefId=FMAS24+Video+Ad+%5B1%5D
#fmas24 #fmas #fmevents #financeinafrica #traders #investors #affiliates #forexTraders #investmentOpportunities #B2BNetworking #finTech #Innovations #TradingCommunity #BusinessOpportunities #AfricanBusiness #Johannesburg #southafrica
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Get ready to mark your calendars for FMAS:24, returning this May! Take a quick glimpse of what awaits at the Sandton Convention Centre in Sandton, South Africa from May 20-22, 2024.
Don't miss out on this 5-second invite packed with energy and urgency!
Secure your free ticket now 🔗 https://events.financemagnates.com/yQx0l?utm_source=youtube&utm_campaign=fmas-is-back&utm_medium=video&RefId=FMAS24+Video+Ad+%5B1%5D
#fmas24 #fmas #fmevents #financeinafrica #traders #investors #affiliates #forexTraders #investmentOpportunities #B2BNetworking #finTech #Innovations #TradingCommunity #BusinessOpportunities #AfricanBusiness #Johannesburg #southafrica
📣 Stay updated with the latest in finance and trading!
Follow FMevents across our social media platforms for news, insights, and event updates. Connect with us today:
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Here's a sneak peek into the FMAS:24 vibrant atmosphere! Join us at Africa’s premium financial event for a transformative experience that combines the best of finance and technology.
From May 20-22, 2024, the Sandton Convention Centre in Sandton, South Africa, will be the hub for over 3,500 attendees to engage in unparalleled networking opportunities, learn from over 150 industry-leading speakers, and explore innovations from 120+ exhibitors.
Secure your free ticket now 🔗 https://events.financemagnates.com/yQx0l?utm_source=youtube&utm_campaign=fmas-is-back&utm_medium=video&RefId=FMAS24+Video+Ad+%5B1%5D
#fmas24 #fmas #fmevents #financeinafrica #traders #investors #affiliates #forexTraders #investmentOpportunities #B2BNetworking #finTech #Innovations #TradingCommunity #BusinessOpportunities #AfricanBusiness #Johannesburg #southafrica
📣 Stay updated with the latest in finance and trading!
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Don't miss out on our latest videos, interviews, and event coverage. Subscribe to our YouTube channel for more!
Here's a sneak peek into the FMAS:24 vibrant atmosphere! Join us at Africa’s premium financial event for a transformative experience that combines the best of finance and technology.
From May 20-22, 2024, the Sandton Convention Centre in Sandton, South Africa, will be the hub for over 3,500 attendees to engage in unparalleled networking opportunities, learn from over 150 industry-leading speakers, and explore innovations from 120+ exhibitors.
Secure your free ticket now 🔗 https://events.financemagnates.com/yQx0l?utm_source=youtube&utm_campaign=fmas-is-back&utm_medium=video&RefId=FMAS24+Video+Ad+%5B1%5D
#fmas24 #fmas #fmevents #financeinafrica #traders #investors #affiliates #forexTraders #investmentOpportunities #B2BNetworking #finTech #Innovations #TradingCommunity #BusinessOpportunities #AfricanBusiness #Johannesburg #southafrica
📣 Stay updated with the latest in finance and trading!
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Join 3500+ Attendees at FMAS:24 | Africa's Premium Financial Event
Join 3500+ Attendees at FMAS:24 | Africa's Premium Financial Event
Looking to expand your network in #Africa? Join 3500+ attendees at FMAS:24, where online trading, fintech, payments, and crypto meet! Connect with industry leaders and innovators for an unmatched networking experience.
20-22 MAY 2024
Sandton Convention Center, Sandton, South Africa
Register now to secure your spot: https://bit.ly/3JbUpCK
#fmas #fmas24 #fmevents #networking #finance #africa
📣 Stay updated with the latest in finance and trading!
Follow Finance Magnates for news, insights, and event updates across our social media platforms. Connect with us today:
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Looking to expand your network in #Africa? Join 3500+ attendees at FMAS:24, where online trading, fintech, payments, and crypto meet! Connect with industry leaders and innovators for an unmatched networking experience.
20-22 MAY 2024
Sandton Convention Center, Sandton, South Africa
Register now to secure your spot: https://bit.ly/3JbUpCK
#fmas #fmas24 #fmevents #networking #finance #africa
📣 Stay updated with the latest in finance and trading!
Follow Finance Magnates for news, insights, and event updates across our social media platforms. Connect with us today:
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Join 3500+ Attendees at FMAS:24 - Africa's Premium Financial Event
Join 3500+ Attendees at FMAS:24 - Africa's Premium Financial Event
Looking to expand your network in #Africa?
Join 3500+ attendees at FMAS:24, where online trading, fintech, payments, and crypto meet! Connect with industry leaders and innovators for an unmatched networking experience.
20-22 MAY 2024
Sandton Convention Center, Sandton, South Africa
Register now to secure your spot: https://bit.ly/3JbUpCK
#fmas #fmas24 #fmevents #networking #finance #africa
Looking to expand your network in #Africa?
Join 3500+ attendees at FMAS:24, where online trading, fintech, payments, and crypto meet! Connect with industry leaders and innovators for an unmatched networking experience.
20-22 MAY 2024
Sandton Convention Center, Sandton, South Africa
Register now to secure your spot: https://bit.ly/3JbUpCK
#fmas #fmas24 #fmevents #networking #finance #africa
Where the Prop Trading Industry Goes from Here | Finance Magnates Podcast
Where the Prop Trading Industry Goes from Here | Finance Magnates Podcast
Explore the tumultuous world of prop trading in this Finance Magnates podcast episode, featuring insights from Head of Axi Select, Greg Rubin.
We're discussing the challenges and shifts caused by MetaQuotes' pivotal decisions affecting MT4 and MT5 users, and how Axi Select offers a unique, realistic path to professional trading, steering clear of traditional prop firm pitfalls.
Tune in for expert analysis on the future of trading and innovative funding models.
The Axi Select programme is only available to clients of AxiTrader Limited. CFDs carry a high risk of investment loss. In our dealings with you, we will act as a principal counterparty to all of your positions. This content is not available for AU, NZ, EU and UK residents. For more information, refer to our Terms of Service. Standard trading fees apply.
This content is provided solely for general informational purposes and should not be construed as financial product advice or an investment recommendation. It has been prepared without considering your personal circumstances.
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Explore the tumultuous world of prop trading in this Finance Magnates podcast episode, featuring insights from Head of Axi Select, Greg Rubin.
We're discussing the challenges and shifts caused by MetaQuotes' pivotal decisions affecting MT4 and MT5 users, and how Axi Select offers a unique, realistic path to professional trading, steering clear of traditional prop firm pitfalls.
Tune in for expert analysis on the future of trading and innovative funding models.
The Axi Select programme is only available to clients of AxiTrader Limited. CFDs carry a high risk of investment loss. In our dealings with you, we will act as a principal counterparty to all of your positions. This content is not available for AU, NZ, EU and UK residents. For more information, refer to our Terms of Service. Standard trading fees apply.
This content is provided solely for general informational purposes and should not be construed as financial product advice or an investment recommendation. It has been prepared without considering your personal circumstances.
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