Following last year’s consultation, regulations for UK’s Digital Securities Sandbox (DSS) has now come into force. The regulations are a part of the country’s Financial Services and Markets Act, and will be managed by the Financial Conduct Authority (FCA) and Bank of England (BoE). At last count, 19 firms had expressed an interest in participating in the sandbox.
Some concerns brought up during the consultation remain unresolved. One is volume limits, with some pointing out that it was volume limits that discouraged larger institutions from joining the EU’s DLT Pilot Regime. Under the DSS, volume limits remain undefined, but the legislation states that “The Treasury may direct the appropriate regulator, having first consulted with them, to impose restrictions on the overall FMI activities or ancillary FMI activities in the FMI sandbox arrangements, whether by reference to a number, value or another metric”.
The DSS is expected to run for up to five years. Interested firms can continue to apply to be participants. Four types of financial market infrastructures (FMIs) are eligible: UK recognised investment exchanges, recognised CSDs, multilateral trading facilities, and organised trading facilities.