Yesterday the European Securities and Markets Authority (ESMA) published the final format for the application process to participate in the EU’s DLT Pilot Regime for digital securities. The program commences in March 2023 and the application forms enable participants to start preparing.
The pilot program allows market infrastructures to use blockchain, either permissioned or permissionless, for the issuance and trading of tokenized stocks, bonds and funds, including money market funds. Participants are allowed some limited exemptions from current legislation.
For example, for exchanges or multilateral trading facilities (MTFs), one of the exemptions is allowing users to trade directly without going through a broker. Another is the combination of a trading and post-trade infrastructure, so a central securities depository (CSD) can also operate an exchange or vice-versa. Or a broker could do both.
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