UK regulators are seeking feedback on draft guidance designed for firms aiming to enter the new Digital Securities Sandbox (DSS).
The DSS aims to adjust regulations in the UK, allowing financial market participants to leverage new technologies, such as distributed ledger technology, for trading and settling digital securities, including shares and bonds. Successful applicants to the DSS will be authorized to offer securities depository and settlement services while operating a trading venue under these revised regulations, marking the first time these services can be provided by a single legal entity.
The government has already received 19 expressions of interest from established financial market infrastructures, banks, and new entrants looking to take part in the initial tests of the sandbox, which is expected to last for five years.
The Bank of England and the FCA have published draft guidance for these firms, outlining how the Bank intends to facilitate the scaling of their activities once they are authorized for live operations. This presents an opportunity for interested parties to provide feedback on the practical functioning of the sandbox.
Sasha Mills, Executive Director of Financial Market Infrastructure at the Bank of England, stated, “The Digital Securities Sandbox is an important tool for regulators to learn how we need to react to benefit safely from developments in technology and changes to vital financial market processes such as securities settlement.”
Sheldon Mills, Executive Director of Consumers and Competition at the FCA, remarked, “The new Digital Securities Sandbox reshapes how we regulate by allowing firms to test regulatory changes using real-world situations before these changes are made permanent. We hope this will be a more effective, collaborative, and quicker way of delivering regulatory change.”