Utrg, UAB (“we” or “the Company”) is committed to acting in the best interests of our clients. In accordance with Article 72 of the EU Markets in Crypto-Assets Regulation (MiCA), we disclose below the general nature and sources of potential conflicts of interest that may arise in the course of our crypto-asset services, as well as the steps we take to mitigate them. This information is provided to help our clients make informed decisions and to maintain transparency about our business practices.
1. Identification of Potential Conflicts of Interest
We have identified the following situations where conflicts of interest could potentially arise between Utrg, UAB (including our managers, employees, or any person associated with us) and our clients, or among our clients inter se:
- Multiple Roles: Utrg acts as both a crypto-asset exchange operator and a custodian of clients’ crypto-assets. This means we facilitate trading transactions while also safeguarding assets. There is a potential conflict if, for example, information obtained through our custody services (such as knowledge of large asset movements) were misused to advantage our trading operations.
- Personal Interests of Staff: Directors, employees or other connected persons of Utrg might hold investments in certain crypto-assets or have outside relationships (e.g. advisory roles, close friendships with persons in other crypto projects). For instance, an employee could be in a position to exploit non-public information for personal gain, or to influence decisions in favor of a project they are involved with externally.
- Third-Party Influences: We may from time to time receive requests or incentives from third parties – such as crypto-asset issuers seeking to list their tokens on our platform, or service providers and business partners. This creates a potential conflict if such an issuer or partner’s interest in promoting their product does not align with the best interests of our clients. For example, a token issuer might offer to pay us higher fees for listing, which could conflict with our duty to list only assets that are suitable and beneficial for our clients to have access to.
2. Our Policies and Procedures to Mitigate Conflicts
Utrg, UAB has implemented a comprehensive Conflict of Interest Policy and robust internal procedures to prevent or manage the above conflicts. Key measures include:
- Segregation of Functions: We separate duties that could conflict. For example, our asset custody team is operationally distinct from our trading platform team, with strict controls on information exchange between them. Client asset information obtained by custodians is not shared with trading personnel, ensuring that no unfair trading advantage is gained.
- Information Barriers: We maintain the confidentiality of sensitive information through “Chinese walls”. Material non-public information about clients’ orders or holdings is restricted to the relevant teams on a need-to-know basis. Other teams or clients cannot access this information, which mitigates the risk of it being misused.
- No Inappropriate Incentives: Our employees’ compensation is structured to avoid conflicts. Notably, we do not create direct links between revenue in one business area and pay in another in a way that would encourage biased behavior. For instance, no staff bonus is directly tied to the trading fees generated from specific assets they might have an interest in. Similarly, our listing decisions are not driven by payments from issuers – we have objective criteria for asset listings.
- Personal Account Dealing Rules: We have strict rules that prohibit our staff from exploiting insider knowledge. Any personal trading by our staff in crypto-assets that trade on our platform must be pre-approved and is monitored. Staff are forbidden from trading based on confidential information or in any way that disadvantages clients. These controls are in place to prevent conflicts arising from employees’ personal financial interests.
- Disclosure and Abstention: Our corporate governance ensures that if our board members or staff have a personal conflict in a matter (for example, a board member has an interest in a token we might list), they must disclose it and recuse themselves from relevant decisions. This ensures decisions are made impartially. We also avoid hiring or placing individuals in roles where their outside interests conflict with their duties (e.g. we restrict concurrent positions in competitor firms).
- Fair Client Treatment: We have an obligation to treat our clients fairly. Our trading platform’s matching engine and order handling procedures are designed to be fair and automated, so no client is given unfair priority. In the event of limited opportunities, we would allocate based on transparent rules (e.g. first-come-first-served or pro-rata) rather than favor any particular client. We do not engage in practices like front-running client orders.
- Transparent Fee Structure: All fees and commissions are clearly disclosed to clients. Utrg does not receive hidden inducements from third parties for routing client business. This transparency removes a source of potential conflict where the firm’s profit could otherwise come into tension with the best execution for the client.
- Independent Compliance Oversight: Our independent Compliance function monitors for conflicts and has the authority to veto or alter business decisions that may be conflict-ridden. For example, Compliance reviews new product approvals, marketing materials, and significant transactions to ensure conflicts have been addressed.
- Client Consent and Disclosure: In the rare cases where a conflict of interest is identified that cannot be sufficiently mitigated by our controls, we will inform any affected client about the nature of the conflict and the measures taken, before proceeding with the transaction. This allows the client to decide whether to continue. We view such disclosures as a last resort – our goal is to resolve conflicts internally – but they are available to ensure client interests are protected.
3. Ongoing Management and Updates:
We continuously monitor our business for new conflict of interest situations. This disclosure will be updated if we identify new significant conflicts or if there are changes in our services. For example, if Utrg were to start offering a new service like crypto lending which might introduce lender vs. borrower conflicts, we would add that to this statement along with how we manage it. Our Conflict of Interest Policy is reviewed at least annually to ensure its effectiveness.
4. Your Trust:
Managing conflicts of interest fairly is fundamental to our duty to you as our client and to maintaining your trust. This document forms part of our broader compliance framework under MiCA and is available to all clients upon request. If you have any questions or require more information on how we handle conflicts of interest, please contact us at [email protected].
