CySEC Chair Foresees Rigorous Regulation For Prop Trading

During the iFX EXPO 2024 gathering, Dr. George Theocharides, the Head of the Cyprus Securities and Exchange Commission (CySEC), gave a speech concerning proprietary trading firms.

He said Prop trading firms will be watched more closely soon and in the next few years. He added that chances are that, at some stage, these companies will fall under tight regulatory control.

Last month, it was reported that the European Securities and Markets Authority (ESMA) did an initial review of prop trading companies and talked about possible rules for the industry.

MiCA Aims To Reduce Risks Of Asset-Backed And E-Money Tokens

Dr. Theocharides explains that while prop trading is attracting regulatory attention and there are initial discussions amongst regulators, these talks are currently in their early stages. Regarding the desired regulatory framework, the CySEC chair explained that there are better times to predict whether prop trading will fall under MiFID or another regulatory framework.

At the end of Last month, specific parts of the Markets in Crypto-Assets Regulation (MiCA) were put into operation, especially those concerning tokens backed by assets and tokens classified as electronic money. This early implementation is part of a phased schedule to apply MiCA, aimed at introducing comprehensive rules for crypto-assets across the European Union.

MiCA is regulating tokens backed by assets and electronic money tokens to reduce the risks that come with these assets. These risks include the unstable nature of their prices and mixed understanding among customers, which can impact how the financial system works and what’s good for consumers.

This partial start helps focus on critical areas first, setting basic rules for precise information, good management, and keeping consumers safe before the complete regulations begin at the end of 2024.

ESMA And NCAs Will Thoroughly Examine Companies Seeking MiCA Licenses

Dr. Theocharides noted that this is a big move for Europe. For some years, there have been many preparations and talks about MiCA.

He added that now, it is the first main area to make a solid and clear set of rules for watching over the digital asset services industry. This is a big first move, but there’s more to do as the industry keeps changing, and the rules must also change.

Under MiCA, crypto companies can offer services all over Europe, similar to how MiFID-regulated firms operate. This change has created new opportunities for these providers. However, Theocharides noted that due to these passport benefits, there would be a thorough examination in Europe by ESMA and NCAs for any company that seeks to acquire a license under MiCA.