More than a year after Europe’s DLT Pilot Regime came into force in March 2023, not a single platform has been approved. The European Securities and Markets Authority (ESMA) recently revealed that four applications are pending. One of those is from Germany’s 21X, the only one of the quartet that has applied for a DLT trading and settlement systems (DLT TSS) license. If approved, this would allow it to both operate a secondary market (DLT MTF) and run the settlement systems (DLT SS).
“We were the first DLT TSS applicant in Europe. We do have a first mover advantage that we are hoping to realize,” 21X CEO Max Heinzle told Ledger Insights.
Traditionally there’s a strict separation between the exchange and the central securities depository (CSD). So the DLT Pilot Regime is relaxing this requirement for TSSs. Another traditional finance (TradFi) requirement is that exchanges can only deal with brokers and not retail users directly. The DLT Pilot Regime supports direct consumer access provided the operator offers consumer compensation and a couple of other restrictions.
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