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Global exchanges urge Britain not to ban crypto-linked derivatives

Mon, 7th Oct 2019 13:10

By Huw Jones

LONDON, Oct 7 (Reuters) - Global exchanges urged Britain's
markets watchdog on Monday not to ban retail sales of
derivatives linked to crypto assets such as bitcoin, saying they
were well equipped to protect consumers trading on their
platforms.

Crypto assets have attracted considerable consumer interest
in some cases, holding out the prospect of lucrative new
business activity for market participants.

Britain's Financial Conduct Authority (FCA) said in July
that derivatives and exchange traded notes referencing certain
crypto assets were ill-suited to retail consumers who cannot
realiably assess value and risks.

In a public consultation paper, the FCA proposed a ban on
sales of the products to retail customers. It will announce
final rule changes in early 2020.

The World Federation of Exchanges (WFE) said there was a
need to find the right balance between enabling innovative
products to be traded in Britain, and ensuring consumers are
protected.

"The WFE recognises the volatility identified by the FCA in
its consultation report and is supportive of ensuring that
proper consumer protection is put in place as a priority for any
new and relatively untested product on the market," the WFE said
in a statement.

Exchanges and clearing houses that are members of the WFE
are fully regulated, thereby diminishing risk for retail
investors from traded products based on crypto assets, the WFE
said.

If the ban goes ahead next year, the WFE, whose members
include Deutsche Boerse and London Stock Exchange
, called for review after a set period of time.

"This review is also designed to avoid international market
fragmentation, particularly if international standard setters
introduce a new global regulatory approach to the regulation of
crypto assets," the WFE said.

The FCA has estimated retail consumers could potentially
benefit by between 75 million and 234.3 million pounds ($92-$289
million) from a ban by avoiding lossses from investments.

($1 = 0.8116 pounds)
(Reporting by Huw Jones; Editing by Mark Potter)

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