FCA and BoE consult on Digital Securities Sandbox

The BoE and FCA are consulting on the Digital Securities Sandbox which will allow participants to use developing technologies to carry out some of the traditional activities of CSDs and trading venues. Instruments such as equities, corporate and government bonds, money market instruments, units in funds and emissions allowances could all be traded within the sandbox.

The regulators want market participants to be able to use the sandbox issued securities in the same way as they would any others, including writing derivatives based on them. The BoE will, however, put limits on the value of securities that can be issued in the sandbox.

The sandbox will comprise of different stages of permitted activity, and the participants can move up from one stage to the next. The consultation sets out the proposed regulatory approach to the stages and on how the regulators plan to manage financial stability and market integrity risks and the supervision strategy.  It also includes suggestions on the fee tariff.

Consultation closes on 29 May. The regulators comment that this is a relatively short period as the regime is not permanent and that its rules can also be amended during its lifetime.

Emma Radmore