The European Securities and Markets Authority (ESMA) has issued a discussion paper titled “ The Distributed Ledger Technology Applied to Securities Markets ” for a public consultation on distributed ledger technology (DLT). ESMA is seeking feedback on the possible use of DLT in securities markets, including potential benefits and risks.
The Telegraph notes that shares could eventually be traded almost instantly without the costly safety net of clearing houses by using the blockchain, the building blocks of Bitcoin, although the technology remains at an early stage. While DLT was first deployed to run the Bitcoin network, it could be adopted to streamline securities trading.
ESMA began analyzing virtual currencies in 2013 and then analyzed investments using virtual currencies or DLT, including possible risks and benefits, on which ESMA is now seeking more in-depth feedback to further its assessment.
The public “ Consultation on the Distributed Ledger Technology Applied to Securities Markets ” runs from June 2 to September 2, 2016. Stakeholders and other interested parties are invited to respond to the questions stated in the discussion paper and describe alternatives that ESMA should consider. In particular, the ESMA is seeking feedback and opinions from fintech companies and financial institutions interested in the use of DLT in securities markets such as banks, central counterparties, central securities depositaries, custodians, asset managers and investors.
Two of the key questions asked, which seem especially representative as indication of ESMA’s targets, are, “If you are working on a concrete application of the DLT to securities markets please describe it (i.e., which activities, which market segments, which type of assets and for which expected benefits) and explain where you stand in terms of practical achievements in relation to your objectives,” and “Do you see potential regulatory impediments to the deployment of the DLT in securities markets?”
ESMA will use […]
