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ESMA Discussion Paper

Distributed Ledger Technology Applied to Securities Markets

Technology in Securities Market

Over the summer ESMA published a Discussion Paper on the Distributed Ledger Technology (“DLT”) Applied to Securities Markets, seeking feedback from stakeholders on the possible use of DLT in securities markets, its potential benefits and the risks that could potential arise for the use of such technology.

The discussion paper identified and discussed the EU regulations including the European Market Infrastructure Regulation (EMIR), the Securities Finality Directive (SFD), and the Central Securities Depositories Regulation (CSDR) which would be applicable to DLT.

Some of the potential benefits of DLT that ESMA has identified are increased security and greater efficiency in clearing and settlement, resulting in a reduction in costs.

EMSA has identified that solutions to legal and technical challenges would need to be found before DLT could be applied widely to the securities markets.

The deadline for feedback was 2nd of September 2016 and the feedback will help ESMA “to assess the opportunities and challenges posed by DLT from a regulatory standpoint and form an opinion on whether a specific regulatory response to the use of this technology in securities markets is needed “.

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