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EU DLT Pilot Regime A guide to the application process for operating a DLT market infrastructure

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    The European Union DLT Pilot Regime (DLT Pilot Regime), which has an implementation date of 23 March 2023, represents a significant step forward in the use of distributed ledger technology (DLT) in the European financial services sector.  When originally drafted, EU financial services legislation did not envisage DLT and/or digital assets and therefore contains provisions which may prevent or constrain the use of DLT in the issuance, trading and settlement of financial instruments.  

    The DLT Pilot Regime seeks to address this state of affairs by providing authorisation to Multilateral Trading Facilities (MTFs) and Central Securities Depositaries (CSDs) to operate DLT financial market infrastructure.  As part of such authorisation, MTFs and CSDs can be granted temporary exemptions, for a period of up to six years, from certain existing requirements of EU financial services legislation in order to enable the use of DLT without contravening such legislation.

    Following the publication by the European Securities and Markets Authority (ESMA) on 15 December 2022 of Guidelines on standard forms, formats and templates to apply for permission to operate a DLT Market Infrastructure (Guidelines), new market entrants and incumbent market participants can immediately start preparing their applications to operate DLT market infrastructures under the DLT Pilot Regime.

    We have prepared a guide in order to assist financial markets incumbents to enlarge their scope of activities, and new financial market entrants to offer new services, pursuant to the DLT Pilot Regime. 

    The guide provides:

    •  an overview of the DLT Pilot Regime;
    •  information about the application process for the DLT Pilot Regime;
    •  our observations on the approach taken by ESMA in the Guidelines; and
    •  a summary of the current status of the proposed UK Financial Market Infrastructure Sandbox (FMI Sandbox) which is considered to be the UK equivalent of the DLT Pilot Regime. 

    Download PDF

    Read our guide to the application process for operating a DLT market [PDF]

    The information provided is not intended to be a comprehensive review of all developments in the law and practice, or to cover all aspects of those referred to.
    Readers should take legal advice before applying it to specific issues or transactions.


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