In other news, MAS reins in crypto services, LTX applies A.I. to RFQs & the FCA wants to consolidate trading data.
Officials from Key Firms Join Digital Assets Subcommittee
The CFTC recently announced that its Digital Asset Markets Subcommittee will have co-chairs from BNY Mellon and Franklin Templeton.
Caroline Butler, global head of digital assets at BNY Mellon, and Sandy Kaul, senior vice president, head of digital and industry advisory services at Franklin Templeton, will serve as co-chairs of the regulator’s digital assets subcommittee.
The subcommittee assignments are part of CFTC Commissioner Caroline D. Pham’s announcement about the new leaders and members of the Global Markets Advisory Committee (GMAC) and its subcommittees for Global Market Structure, Technical Issues, and Digital Asset Markets.
“As our industry continues to evolve, BNY Mellon is committed to playing a leadership role in shaping the future of finance for the betterment of our clients and the broader ecosystem,” Butler says.
Caroline D. Pham
“Franklin Templeton has been a passionate proponent of exploring and delivering opportunities in the digital asset markets and we so appreciate the CFTC’s leadership in this arena and are excited to take on a leadership role and work with other industry participants towards the goal of shaping a 21st century financial ecosystem,” says Kaul.
“In total, there are 128 members across the GMAC and its subcommittees, constituting the largest-ever single advisory committee initiative sponsored by the CFTC. The next public meeting of the GMAC is on July 17, 2023, at the New York Stock Exchange,” say CFTC officials.
More details about the GMAC and subcommittees can be found here: https://bit.ly/3O0Wxk1
Singapore’s Central Bank Clamps Down on Crypto Services
Officials of the Monetary Authority of Singapore (MAS) are requiring digital payment token (DPT) service providers to put customer assets “under a statutory trust before the end of the year.”
The effort is an attempt to “mitigate the risk of loss or misuse of customers’ assets, and facilitate the recovery of customers’ assets in the event of a DPT service provider’s insolvency,” MAS officials say. “MAS will also restrict DPT service providers from facilitating lending and staking of DPT tokens by their retail customers.”
The proposed measures follow an October 2022 public consultation and require crypto service providers to:
- Segregate customers’ assets from their own assets and to hold them in trust;
- Safeguard customers’ money;
- Conduct daily reconciliation of customers’ assets and keep proper books and records;
- Maintain access and operational controls to customers’ DPTs in Singapore;
- Ensure that the custody function is operationally independent from other business units; and
- Provide clear disclosures to customers on the risks involved in having their assets held by them.
“MAS is now seeking public feedback on the draft legislative amendments to the Payment Services Regulations here to put these requirements into effect. MAS will also publish guidelines in due course to support consistent implementation by the industry,” officials say. “MAS invites interested parties to submit their comments on the proposed legislative amendments and the proposed regulatory measures to address market integrity risks by 3 August 2023.”
LTX Launches RFQ+ to Help With Large Trades
An electronic trading platform for corporate bonds LTX, a subsidiary of Broadridge Financial Solutions, has launched RFQ+, a request for quote protocol that uses artificial intelligence (A.I.) technology, officials say.
RFQ+ “combines pre-trade dealer selection analytics with liquidity aggregation capabilities,” officials say. The new protocol “facilitates larger trades by aggregating multiple dealer responses for their desired amounts.”
RFQ+ is “a complement to LTX’s unique RFX protocol,” officials say. Like RFQ+, the BondGPT offering uses OpenAI GPT-4, officials add.
“Executing size in today’s credit markets is often challenging,” says Steve Chylinski, head of FI trading at Eagle Asset Management, in a prepared statement.
“The approach that LTX is taking to build on the familiar RFQ protocol with RFQ+, the innovative aggregation capabilities and A.I.- powered dealer selection scores can potentially be a game changer for the buy side and dealers to execute larger trades electronically,” Chylinski says.
Dealer selection scores “allow a buy-side client to optimize the number of dealers to whom the client sends each RFQ, based on dealers’ real-time and historical LTX Liquidity Cloud inputs as well as pricing and platform behavior,” according to LTX. The Liquidity Cloud is the LTX network of anonymous real-time buy- and sell-side indications of interest that include CUSIP, direction, price, and size.
“After an RFQ+ is sent to an optimal group of dealers, multiple dealer responders can bid/offer for the size they each want. Patent-pending technology aggregates the bids/offers, allowing the buy-side client to fulfill the block in one session with multiple dealers,” LTX officials add.
LTX is a division of Broadridge Business Process Outsourcing, the broker-dealer subsidiary of Broadridge.
U.K.’s FCA to Launch Consolidated Tape for Trading Data
U.K. regulator the Financial Conduct Authority (FCA) is proposing to launch a consolidated tape (CT) process to help investors “get clear and low-cost trading data” that will help them “make better, more timely decisions.”
“A CT combines multiple sources of trading data into one stream of information. This will increase transparency and access to trading data by lowering its cost and improving data quality,” according to the regulator. “The FCA is proposing a CT first for bonds, where the UK has a leading global market, followed by equities.”
The FCA will conduct “a competitive tender process to appoint a single CT provider for bonds,” officials say. “As part of the Edinburgh reforms, the FCA is working with the government with the aim of having the regulatory framework in place by 2024. By building a more complete picture of the market, a CT will reinforce the UK’s position as a leading center for the listing and trading of bonds.”
In addition, the FCA “will consult on further reforms to bond and derivative transparency requirements later this year, with the aim of creating a simpler and more effective regime which will enhance the content and delivery of trade data in U.K. markets alongside the CT,” officials say.
“The new consolidated tape will help reduce trading costs, increase transparency and improve data quality,” says Sarah Pritchard, executive director of markets and executive director of international at the FCA, in a statement.
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