In its response, the WFE outlines the importance of the roles of both the exchange and CCP in the trading and clearing of derivatives contracts, bringing societal benefits as well as opportunities for individual market participants. It notes that established exchanges offer a venue whereby exchange-traded and centrally cleared derivatives are subject to pre- and post-trade standards, set by the exchange listing and the CCP clearing the trades.

The WFE therefore welcomes and commends the proposal that established regulated market infrastructure would be recognised by MAS as the appropriate market operators to conduct, and instil, the high standards required for the trading of crypto asset based derivatives contracts. It recommends, however, that there is specific inclusion and greater clarity on how third-country recognition processes might function to enable third-country market infrastructure to trade said Payment Token Derivatives.

Whilst recognising the MAS’s concerns with the suitability of trading Payment Token Derivatives for retail investors, the WFE encourages the MAS to keep the restrictions placed on trading with retail investors under review as the market evolves and matures in the stability of its trading environment. This would also enable the MAS to respond to and adopt any forthcoming global regulatory approach to crypto asset regulation. This is a policy that the WFE has consistently advocated across all jurisdictions in its work on the crypto asset market, as the ability to set international regulatory consensus in an emerging market is not one to be missed in ever more fragmented world.

The WFE also suggests that trading platforms which do not fall within the high regulatory standards associated with established market infrastructure should be banned or restricted from offering Payment Token Derivatives products to institutional or retail investors, to ensure greater investor protection, and to avoid undermining the additional processes, safeguards and extra investment required by WFE members, due to their systemic importance as central market infrastructure.

Nandini Sukumar, Chief Executive Officer, WFE said: “The WFE welcomes the decision of the MAS to allow Payment Token Derivatives to be traded and cleared by established market infrastructure venues. This is exactly what regulated market infrastructure is for: enabling price discovery in innovative new products and markets, and supporting the relevant post-trade requirements. However, the ability to trade openly on international markets is the cornerstone of what the WFE stands for and seeks to promote. As such, we would support the MAS if it were to ensure that all established international market infrastructures that operate the high standards required, are able to trade these products.”