In December the European Commission announced a broad package of capital markets legislation, the Market Integration and Supervision Package (MISP), that included several updates to the DLT Pilot Regime to make it more usable. In February nine DLT Pilot licensees and pending applicants requested the Commission, Council and Parliament to separate some straightforward changes, so that they do not get held up in the complex MISP legislative process. Now 40 organizations, including five from the original group, are making a similar request. The signatories include several traditional finance institutions and numerous EU fintech and trade associations, signaling that it is not simply licensees that want these changes.
The DLT Pilot Regime provides the key regulatory pathway for the issuance, trading and settlement of tokenized securities. It allows a digital alternative to CSDs that use blockchain to record transactions, supports a single institution providing trading and settlement services, and permits direct to consumer trading of securities, without brokers.
The traditional finance names that signed the letter include Boerse Stuttgart, Danske Bank, LBBW, Nasdaq and Union Investment, as well as German securities trade association BWF. Since MISP was drafted the US has significantly accelerated the regulatory clarity around tokenized securities.
On both occasions the letter signatories requested the same expedited elements, all of which are part of MISP. They include increasing volume limits to €100 / 150 billion, the expansion to all MiFID asset classes including dropping limits related to specific classes, making the DLT regime permanent, and ensuring any approved changes come into force immediately.
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