Distributed ledger technology and financial market infrastructures: an EU pilot regulatory regime

Abstract

The release of the European Commission’s Digital Finance Strategy in September 20201 was a notable progression from previous initiatives for the regulation of FinTech within the European Union. Rather than persisting solely with a monitoring stance towards technological innovations in finance, the package published by the Commission evinces a more proactive approach through legislative intervention. As an indication of the scale of the Strategy, the package consists of three Regulation proposals. The proposed Regulation on a pilot regime for financial market infrastructures (FMIs), based on distributed ledger technology (DLT),2 is of particular significance for its implications for securities trading and post-trading. At the time of publication, the final text of the Regulation has been adopted by the European Parliament at first reading. Aside from its importance as a measure that will imminently affect European capital markets, the legislation warrants analysis as an especially suitable case example of...