November was a relatively busy month for financial markets, with the US election and Covid vaccine news leading the headlines. It was also a spectacular month for digital currencies reached multi-year highs and the US dollar tumbled. As a leading financial services marketing agency, our team has rounded up the top regulation updates that happened in November and what lies ahead for December 2020.
Joe Biden victory raises regulatory stakes
In November, Joe Biden won both the popular vote and the electoral college, making him the president-elect. This means that the regulatory standards in all sectors of the economy are bound to change. That’s because, during his campaigns, Biden promised to increase regulations, which is opposite of what Trump did. After his victory, several Trump regulators announced their decision to leave. The most prominent regulator to announce his resignation was Jay Clayton, who was the head of the Securities and Exchange Commission (SEC). Other regulators appointed by Trump could also resign in the coming months.
CFTC guides against crypto margin trading
A major regulatory event happened last week when Coinbase suspended Coinbase Pro, a product that allowed retail traders to trade on margin. The product had more than 100,000 active traders. In a statement, the company said that the decision was mostly because of a guidance it received from the CFTC. That was a big blow to American crypto exchanges considering that other countries already accept margin trading.
ESMA clarifies on derivatives trading
In a statement in November, the European Securities and Markets Authority (ESMA), clarified trading obligations for derivatives (DTO) as the UK prepares to leave the bloc completely on December 31. In the statement, ESMA said that it was in the best interest for all parties to continue applying the rules considering that they will not create any risk for the financial system. Still the report noted that some entities will find some of the rules challenging. In particular, it cited UK branches of EU firms. On this, the note said:
“Based on the current legal framework, and in the absence of an equivalence decision by the European Commission, ESMA does not see room for providing different guidance.”
Also, ESMA published the names of people who will possibly become chair of the agency. The three people, Maria-Luis Albuquerque, Carmine Di Noia, and Verena Ross, will now go to the European Union Council for appointment.
FCA warns on Lanistar
In November, the Financial Conduct Authority (FCA) sent a warning about Lanistar, one of the most hyped startups in the UK. The regulator warned that the card, which was being promoted by celebrities may be a scam. The main product being promoted by the company was a bank card that it claimed would be the most secure card in the world. Journalists were quick to spot key gaps on Lanistar’s claims. For example, the firm said that it had 400 employees while in its LinkedIn page shows about 50. Also, it cited relationships with Modulr, a claim that the firm has denied.
Meanwhile, the FCA advertised for the position of a technology director as it attempts to address some advanced technical developments. The director will be involved in issues like digital currencies, fintech, and business intelligence.
The regulator also added 6 more months for loan holidays as the country continue battling the reported new wave of the virus.
ASIC in trouble
The Australian Securities and Investments Commission (ASIC) crisis continued ahead of big changes by the Morrison government. In the past two months, the head and his deputy resigned after a series of financial crisis. The chair, James Shipton resigned as investigations about $120,000 paid to cover his tax advice.
His deputy, Daniel Crennan resigned after claims that he paid $70,000 in rental assistance. That led to an investigation by an independent commission, which its results are expected in the November.
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