Investors will be able to access the UK’s pilot digital gilt, DIGIT, through the London Stock Exchange Group’s digital securities depository (DSD) after it was approved to operate as an investor DSD.
The DSD has received Gate 2 approval under the UK Digital Securities Sandbox to perform notary, maintenance and settlement functions. The approval is a significant milestone for the UK’s digital market infrastructure and an important step towards investor access for DIGIT within a regulated environment.
It also covers settlement services via a standard link with HSBC Bank plc’s digital securities depository, HSBC Orion, subject to designation approvals for both HSBC and LSEG.
LSEG’s Digital Settlement House (DiSH) is intended to provide the first cash settlement arrangement for transactions on the DSD, including the DIGIT pilot, enabling delivery-versus-payment settlement. LSEG plans to support further cash settlement options over time as market demand and regulation evolve.
DIGIT will explore how distributed ledger technology can be applied across the debt issuance lifecycle, and aims to catalyse its development in UK financial markets.
Daniel Maguire, group head of Markets and CEO of LCH Group, called the approval an important milestone for the development of digital financial markets in the UK. “We look forward to working with the government and market participants as the pilot progresses,” he said.