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CANADA: The Application of Securities Legislation to Crypto Asset Trading Platforms (CTPs)

CANADA: The Application of Securities Legislation to Crypto Asset Trading Platforms (CTPs)

On March 29, 2021, The Canadian Securities Administrators (CSA) and the Investment Industry Regulatory Organization of Canada (IIROC) published a Notice to provide guidance on how securities legislation applies to Crypto-Asset Trading Platforms (CTPs) that facilitate trading so Security Tokens and Crypto Contracts. The Notice alerts CTPs that they are already subject to existing requirements under securities legislation in Canada.  The Notice focuses on CTPs that facilitate the trading of Security Tokens and/or Crypto Contracts, and highlights, in Appendix B, a summary of IIROC requirements applicable in the context of CTPs. These include, in relevant part, requirements consistent with the core market integrity provisions of UMIR such as UMIR 2.2. (Manipulative and Deceptive Activities), UMIR 2.3 (Improper Orders and Trades), and all UMIR rules that relate to trading activity, supervision, etc. Further, while IIROC has proposed an interim approach to regulation for CTPs that need more time before IIROC membership is obtained, IIROC states that it will consider the use of surveillance tools in assessing whether a CTP is adequately managing their risks.

ViP: With years of experience working with global digital asset exchanges, Validus offers a comprehensive set of procedures to address anti-money laundering, transaction monitoring and market abuse risks associated with trading on CTPs, and in-line with risks contemplated by UMIR. For AML and Transaction Monitoring, Validus includes a broad set of flexible and customizable reports and procedures that look for anomalistic behavior in both account and trade activity. In addition, Validus procedures for market abuse cast a wide-net in search of potential issues, and then apply automation/machine-learning techniques to better highlight problematic activity.  

 

About Eventus Systems

Eventus Systems is a leading global provider of multi-asset class trade surveillance and market risk solutions. Its powerful, award-winning Validus platform is easy to deploy, customize and operate across equities, options, futures, foreign exchange (FX), fixed income and digital asset markets. Validus is proven in the most complex, high-volume and real-time environments of tier-1 banks, broker-dealers, futures commission merchants (FCMs), proprietary trading groups, market centers, buy-side institutions, energy and commodity trading firms, and regulators. The company’s rapidly growing client base relies on Validus and Eventus’ responsive support and product development teams to overcome its most pressing regulatory challenges. For more, visit www.eventussystems.com.

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