The FinancialHong Kong & New York, February 16, 2015, The Financial Commission, a leading alternative dispute resolution and self-regulatory organization for retail traders, operated by FinaCom PLC, is pleased to announce the launch of its regulation for crypto liquidity providers (LPs).
The cryptocurrency liquidity provided through approved cryptocurrency LPs will enable global brokers to benefit from the organization’s regulatory oversight and high membership standards, when providing liquidity to other brokers and directly to end clients.
Outsourced Compliance via Designated Regulatory Organization by FinaCom PLC
Financial Commission will provide compliance oversight as a regulator of the LPs Cryptocurrency liquidity offering. This will ensure that similar standards are maintained – from brokers offering cryptocurrency trading, to the LPs providing the rates and/or execution/settlement and throughout most of the trade life-cycle.
This marks the first step towards more sound Cryptocurrency offerings by aiming to maintain higher standards that member firms and their LPs must adhere to, in order to become and maintain membership status with the Financial Commission, while providing their clients added protection through the dispute resolution process afforded to traders without cost.
Minimum and Net Capital Levels Implemented as Basis for Adequacy for Members
As per FinaCom PLC Rules pertaining to members of the Financial Commission, there are three key categories that brokers must maintain on an ongoing basis, with regards to the following:
- Financial Requirements
- Reporting
- Record Keeping
The Financial Commission took several steps such as implementing capital requirements, reminiscent in structure to other private leading self-regulatory organizations and applicable in cases where a member-firm is not already regulated elsewhere (and specifically as per Annex A, B and C of the member rules). For example, a regulated person or company is:
(i) a broker-dealer registered with the Financial Industry Regulatory Authority, or approved by FinaCom PLC
(ii) a bank or trust company regulated in a money center country;; or
(ii) a bank or trust company which has in excess of $100 million in capital.
Also, highlighted is an excerpt of Annex A of the member rules, which states that each member must maintain net capital amount of 10% of all liabilities owed to Customers exceeding $500,000. In addition, as per section 2.b of Annex A a “Member may not include assets held by an affiliate (unless approved by FinaCom PLC) for purposes of determining its net capital. An affiliate is any person that controls, is controlled by, or is under common control with the Member.”
Many additional aspects of compliance and related criteria in the rules section and above-mentioned Annexes are laid out in the full text available on www.financialcommission.org
Cryptocurrency Solution Parallels Successful Approach to Forex, CFD’s and Binary Options Compliance
The Financial Commission was able to model its own successful approach to regulatory compliance oversight for Forex, CFD and Binary Options, as provided to its members, when creating the infrastructure to provide oversight to Cryptocurrency trading in electronic trading platforms – and now for LPs. The full text of the most updated rules for members can be found on the Commission’s website.
The importance of striving for higher standards with Forex Brokers and fair dealing is even a greater challenge in newly evolving markets such as Bitcoin, in order to build integrity in new products while providing clients with a fair and transparent environment for FX traders.
The announcement today coincides with the Financial Commission’s mission statement and continued strive to provide transparency and educational information to clients while helping brokers resolve complaints and while improving their offerings through a 3rd party compliance rigor – offered by membership with the Financial Commission.
To learn more about the outsourced compliance oversight for Cryptocurrency LPs, the Financial Commission can be contacted through its website listed above.