About a-team Marketing Services

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 leverage Generative AI and Large Language Models for regulatory compliance

Generative AI (GenAI) and Large Language Models (LLMs) offer huge potential for change across capital markets, not least in regulatory compliance where they have the capability to help firms understand and interpret regulations, automate compliance, monitor transactions in real time, and flag anomalies in the same timeframe. They also present challenges including explainability, responsibility, model...

BLOG

European Firms Ready for Next Week’s UPI Regulatory Reporting Deadline

The Derivatives Service Bureau (DSB) has released data on industry readiness for European Unique Product Identifier (UPI) regulatory reporting requirements that are part of EU EMIR Refit regulations. The EU will implement UPI reporting from 29 April 2024, the second G20 jurisdiction to do so following the US that went live from 29 January 2024,...

EVENT

Data Management Summit New York City

Now in its 14th year the Data Management Summit NYC brings together the North American data management community to explore how data strategy is evolving to drive business outcomes and speed to market in changing times.

GUIDE

Pricing and Valuations

This special report accompanies a webinar we held a webinar on the popular topic of Pricing and Valuations, discussing issues such as transparency of pricing and how to ensure data quality. You can register here to get immediate access to the Special Report.