CP24/5: Digital Securities Sandbox joint Bank of England and FCA Consultation Paper

Read Digital Securities Sandbox joint Bank of England and FCA consultation paper

Why we are consulting

These proposals will allow participants to use developing technologies such as Distributed Ledger Technology (DLT) to undertake the activities traditionally associated with Central Securities Depositories and Trading Venues. 

The DSS will allow firms to explore the benefits of these new technologies and practices in traditional financial markets.

The Bank and the FCA will work together to operate the DSS. In doing so, we will pursue three overarching aims: 

• Facilitating innovation to promote a safe, sustainable, and efficient financial system.
• Protecting financial stability, and
• Protecting market integrity and cleanliness.

Who is this for

This consultation is relevant to:

• Firms intending to apply to enter the DSS and be approved as a sandbox entrant.
• Firms who wish to engage with a sandbox entrant but not become one themselves, for example firms seeking to offer custody services for the digital securities that are recorded, traded or settled on those FMIs.

Next steps

Responses are requested by Wednesday 29 May 2024.

Please address any comments or enquiries by email to [email protected].

Alternatively, please write to:

Post Trade and Market Conduct Team 
Financial Conduct Authority
12 Endeavour Square
London
E20 1JN

After a review period, we will issue a formal response to the views submitted as part of the consultation process. Following this, we aim to publish our final rules and guidance and open the DSS for applications during the summer of 2024. 

Background

The application of innovation such as DLT has the potential to make markets more efficient, transparent and resilient and the DSS responds to a desire by industry to safely explore this potential.

By making existing processes faster and cheaper, the adoption of these technologies could, if successfully implemented, lead to material savings across markets and their users. 

This initiative will further our aim of strengthening the UK’s leading position as a global and vibrant financial centre by creating the right conditions for investment, innovation, and sustainable growth, built on globally respected high standards.