Position on the Proposal for a DLT Pilot Regime for Market Infrastructures

FESE welcomes the objective of the European Commission to empower people with a new generation of technologies and, in particular, the opportunity for the financial sector to issue financial instruments using Distributed Ledger Technology (DLT). As such, we support the proposal to include DLT instruments in the MiFID II definition of a financial instrument.

Nevertheless, some key aspects should be finetuned:

• The Regime should remain temporary, voluntary, and limited, allowing market participants to adjust to the new technology without creating a more favourable “parallel regime” for existing financial regulatory frameworks.
• To strike the right balance between innovation friendliness and security, we suggest that the Regime should be reduced in size by lowering the initial thresholds in Art.3(1). This would prevent a DLT MTF from admitting a disproportionate number of instruments currently available on financial markets.
• We would advise the inclusion of a mid-term review of the Regime, allowing room for adjustments before the final review at the end of the pilot.
• The same level of safeguards as in the current regulatory environment (e.g. established in MiFID II/MiFIR, CSDR, SFD, MAR) should be upheld. Any exemption would need to be reasonably justified and clearly outlined.