Under the recently passed Financial Services and Markets Act 2023, the UK’s Treasury has the right to issue Statutory Instruments (SI) to create financial market infrastructure (FMI) sandboxes. Today it published the SI for the Digital Securities Sandbox which comes into force on January 8, 2024. It is still unclear about volume limits.
Last month His Majesty’s Treasury (HMT) clarified the scope of the Digital Securities Sandbox together with the results of a consultation. Volume limits in the EU’s DLT Pilot Regime discouraged some larger institutions from participating. HM Treasury said it planned to impose limits that would take into account the size of the organization.
However, today’s legislation states: “The Treasury may direct the appropriate regulator, having first consulted with them, to impose restrictions on the overall FMI activities or ancillary FMI activities in the FMI sandbox arrangements, whether by reference to a number, value or another metric.”
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