About a-team Marketing Services
The knowledge platform for the financial technology industry
The knowledge platform for the financial technology industry

A-Team Insight Blogs

ESMA Goes Live with Pilot of DLT Regulatory Regime

Subscribe to our newsletter

The European Securities and Markets Authority’s (ESMA’s) pilot of a Digital Ledger Technology (DLT) regulatory regime, which includes the standard Digital Token Identifier (DRI), is up and running. The pilot will operate for six years, during which regulated investment firms, market operators and central securities depositories operating DLT market infrastructure will be able to apply to National Competent Authorities (NCAs) for exemption from certain requirements under Markets in Financial Instruments Regulation (MiFIR), Central Securities Depository Regulation (CSDR), and the Settlement Finality Directive.

ESMA recommended use of the ISO standard 24165 DTI for the pilot of the DLT regulatory regime early this year. DTIs are issued by the DTI Foundation (DTIF), a non-profit division of Etrading Software, with a view to bringing standardisation to digital asset and crypto markets. The pilot extends the MiFIR reporting regime to cover tokenised financial instruments, and brings pre- and post-trade transparency and market abuse monitoring to DLT-based securities.

“The DTI standard is critical to helping industry know what it is dealing with,” says Sassan Danesh, CEO of Etrading Software. “As the industry continues to adopt the standard to build increased transparency and clarity in the market, ESMA’s pilot signals the importance given to pre- and post-trade transparency and protecting industry against market abuse.”

Following the recommendation of the DTI, ESMA issued a Q&A on the DLT pilot regime. On 3 February 2023, ESMA updated the Q&A, which was first published on 16 December 2022, recommending that trading venues, investment firms and approved publication arrangements complement the ISIN by including the DTI when publishing MiFIR post-trade information under Table 3 of Annex I of RTS 1 for equity and equity-like instruments, and Table 2 of Annex II of RTS 2 for non-equities.

DTIF and the Association of National Numbering Agencies (ANNA), the ISO Registration Authority for ISO 6166 International Securities Identification Numbers (ISINs), have been running a joint task force to explore synergies between DTIs and ISINs. The task force has suggested close cooperation between the registration authorities and has been working on identifying security tokens with existing ISINs so that these can be issued with DTIs. So far, over fifty such tokens have been identified, verified and added to the DTI registry.

Stephan Dreyer, managing director of ANNA, says: “Working with the DTIF, ANNA is building interoperability between the ISIN and DTI to harmonise standards in this space. The ISIN standard will continue to provide unique instrument identification as it has for the past forty years and will incorporate new assets, including digital assets.”

Subscribe to our newsletter

Related content

WEBINAR

Recorded Webinar: How to gain operational efficiency in corporate actions processing

While the risk associated with corporate actions is well established, many financial institutions continue with manual processing in the back office. More often than not, corporate actions information is manually keyed in and event processing lacks automation. This results in operational inefficiency, and financial risk due to missed events or simply getting it wrong. These...

BLOG

FinScan Combines Data Quality Experience with Technological Expertise to Deliver Agile AML Solution

FinScan has combined experience in data quality with technological expertise in screening to provide an Anti-Money Laundering (AML) solution designed to help financial institutions develop more efficient AML programmes that generate fewer false positives and support better detection of true alerts. The company is part of Pittsburgh-based Innovative Systems, which was founded in 1968 and...

EVENT

RegTech Summit London

Now in its 8th year, the RegTech Summit in London will bring together the RegTech ecosystem to explore how the European capital markets financial industry can leverage technology to drive innovation, cut costs and support regulatory change.

GUIDE

Regulatory Data Handbook 2023 – Eleventh Edition

Welcome to the eleventh edition of A-Team Group’s Regulatory Data Handbook, a popular publication that covers new regulations in capital markets, tracks regulatory change, and provides advice on the data, data management and implementation requirements of more than 30 regulations across UK, European, US and Asia-Pacific capital markets. This edition of the handbook includes new...