Minutes of the London FXJSC Legal Sub-Committee Meeting – 8 June 2022

Minutes

Date of meeting: 8 June 2022
Time: 3pm – 4.30pm | Location: Video meeting

Item 1: Introduction and Minutes

The minutes of the meeting of 16 March 2022 were approved.

Item 2: Recent regulatory updates on cryptoassets

Musonda Kapotwe discussed recent regulatory updates from the Financial Conduct Authority (the ‘FCA’) and the Bank of England (the ‘BOE’) on cryptoassets including the FCA consultation on financial promotions of cryptossets and the Bank of England’s discussion paper on stablecoins.

Musonda began by detailing the HMT consultation on cryptoassets, stablecoins and the use of DLT in the financial market and in particular the FCA’s cryptoassets guidance, which described three broad categories of cryptoasstes and how they fit within existing FCA regulation. Musonda then went on to outline HMT’s legislative proposals for regulating stablecoins, focusing on their approach to amend existing regulations including Electronic Money Regulations 2011 (EMR) and Payment Service Regulations 2017 (PSR). Musonda outlined the proposals to introduce new regulations in relation to the custody of stablecoins and to extend Part 5 of the Banking Act 2009 to apply in cases where the risks posed have the potential to be systemic.

Musonda and the committee also discussed key themes emerging out of the BOE’s discussion paper on digital money.

Minute 3: Discussion of the impact of Russia’s invasion of Ukraine

The Committee members discussed their observations on several legal issues arising from the developments relating to the Russian invasion of Ukraine. The Committee discussed a number of recent developments in the market, including work done by ISDA, EMTA and GFXD to establish an industry wide solution in relation to a deliverable Ruble, a working group established to develop a multilateral close-out method, and the lateral and multilateral amendment agreement published by EMTA.

Minute 4: FXJSC Committee update

Sharon Blackman and George Johnston gave the members a read-out of the March FXJSC main committee meeting, which included a general market update, a discussion of progress made in Cross Border Payments and an update from the FCA. Sharon and George summarised the discussions in relation to recent market developments in short-term funding markets. And they detailed the discussion had by the main committee on emerging markets and the impact of the Russian invasion of Ukraine.

Minute 5: Any other business

The members discussed a preference for in-person meetings of the legal sub-committee where practicable.

Attendees

Sharon Blackman (Chair) – Citigroup
George Johnston (Secretary) – Bank of England
David Harris – Financial Conduct Authority (FCA)
Baljit Saini – NatWest
Nimisha Kanabar – Morgan Stanley
Gaynor Wood – CLS
Jateen Shah – Bank of America
Dan Parker – Goldman Sachs
Simon Goldsworthy – Deutsche Bank

FXJSC Legal Sub-Committee Secretariat

Zara Coe – Bank of England
Matthew Hartley – Bank of England

Guest attendees

Musonda Kapotwe – Mayer Brown

Apologies

Richard Lamb – UBS
Nasia Pachiti Pallikaropoulou – Barclays
Diane Bouwmeester – London Stock Exchange Group
Tamsin Rolls – JP Morgan
Rakesh Shah – Standard Chartered
Harkamal Atwal – HSBC
Sunil Samani – XTX Markets
Simon Helm – TP ICAP