Featured Product

    ECB Issues Opinion on Proposal for Market Infrastructures Based on DLT

    April 29, 2021

    ECB published an opinion on the proposal for a regulation on the pilot regime for market infrastructures based on distributed ledger technology. ECB published its opinion in response to requests from the Council and the European Parliament, respectively, for an opinion on the proposed regulation. ECB welcomes the proposed regulation, which aims to enable investment firms, market operators, and central securities depositories (CSDs) to operate market infrastructures based on distributed ledger technology (DLT), either as a DLT multilateral trading facility or a DLT securities settlement system.

    In its opinion, ECB sets out the recommendations on the following financial stability and prudential supervisory aspects of the proposal:

    • Settlement of payments in central bank money. ECB considers that settlement in central bank money should be the default requirement for DLT market infrastructures, and therefore an exemption from this requirement should be possible only in cases where the relevant DLT market infrastructure operator proves that this settlement method is not available and practicable.
    • Risk management requirements applicable to banking-type ancillary services. ECB notes that the proposed regulation allows for the possibility that a central securities depository (CSD) that is licensed as a credit institution and operates a DLT securities settlement system, or which relies on a credit institution for the provision of banking-type ancillary services, is exempt from the requirements of Article 40 of the CSD Regulation. ECB proposes that the EU legislative bodies should specify in more detail the scope of the exemptions to Article 40 of the CSD Regulation and the conditions to be met for receiving such exemptions.
    • Exit strategy for operators of DLT market infrastructures and removal of DLT transferable securities from trading. The proposed regulation refers to an exit strategy that operators of DLT market infrastructures must have in place in the event that the permission or some of the exemptions granted have to be withdrawn or otherwise discontinued, or in the event of any voluntary or involuntary cessation of the business. ECB proposes that the EU legislative bodies should provide greater detail on the specific content of the exit strategy and the timeline for its implementation. In addition, the proposed regulation should be supplemented with specific procedures that would be applicable in the case of removal of DLT transferable securities from trading on a DLT multilateral trading facility, as well as in the case of a breach of the EUR 200 million market capitalization limit for the admission to trading on a DLT multilateral trading facility. ECB also suggests that there should be specific arrangements in place for the conversion of such DLT transferable securities into "non-DLT" transferable securities registered in a CSD. 
    • Interplay with the proposed Markets in Crypto-assets regulation. There is a potential mismatch between the proposed regulation and the scope of application of the proposed Markets in Crypto-assets regulation. ECB believes that further consideration should be given to the interaction between the proposed regulation, the proposed Markets in Crypto-assets regulation, and the EU financial services and banking legislation.
    • Prudential supervisory aspects. ECB notes that the approach with regard to the authorization process fosters equal treatment for credit institutions and non-credit institution operators alike and represents a step forward toward risk-based supervision, taking account of the activities performed by a given entity. However, ECB suggests that the proposed regulation should include an obligation on the national competent authority to notify the prudential supervisor, including ECB for significant credit institutions, about whether or not permissions and exceptions are granted as well as where corrective measures are imposed. The proposed regulation should also include the applicable prudential supervisor among the recipients of the regular reporting by the operators of a DLT market infrastructure.

     

    Related Link: Opinion (PDF)

     

    Keywords: Europe, EU, Banking, Securities, Distributed Ledger Technology, Opinion, CSD, Crypto Assets, European Parliament, European Council, ECB

    Related Articles
    News

    EBA Proposes Standards for IRRBB Reporting Under Basel Framework

    The European Banking Authority (EBA) proposed implementing technical standards on the interest rate risk in the banking book (IRRBB) reporting requirements, with the comment period ending on May 02, 2023.

    January 31, 2023 WebPage Regulatory News
    News

    FED Issues Further Details on Pilot Climate Scenario Analysis Exercise

    The U.S. Federal Reserve Board (FED) set out details of the pilot climate scenario analysis exercise to be conducted among the six largest U.S. bank holding companies.

    January 17, 2023 WebPage Regulatory News
    News

    US Agencies Issue Several Regulatory and Reporting Updates

    The Board of Governors of the Federal Reserve System (FED) adopted the final rule on Adjustable Interest Rate (LIBOR) Act.

    January 04, 2023 WebPage Regulatory News
    News

    ECB Issues Multiple Reports and Regulatory Updates for Banks

    The European Central Bank (ECB) published an updated list of supervised entities, a report on the supervision of less significant institutions (LSIs), a statement on macro-prudential policy.

    January 01, 2023 WebPage Regulatory News
    News

    HKMA Keeps List of D-SIBs Unchanged, Makes Other Announcements

    The Hong Kong Monetary Authority (HKMA) published a circular on the prudential treatment of crypto-asset exposures, an update on the status of transition to new interest rate benchmarks.

    December 30, 2022 WebPage Regulatory News
    News

    EU Issues FAQs on Taxonomy Regulation, Rules Under CRD, FICOD and SFDR

    The European Commission (EC) adopted the standards addressing supervisory reporting of risk concentrations and intra-group transactions, benchmarking of internal approaches, and authorization of credit institutions.

    December 29, 2022 WebPage Regulatory News
    News

    CBIRC Revises Measures on Corporate Governance Supervision

    The China Banking and Insurance Regulatory Commission (CBIRC) issued rules to manage the risk of off-balance sheet business of commercial banks and rules on corporate governance of financial institutions.

    December 29, 2022 WebPage Regulatory News
    News

    HKMA Publications Address Sustainability Issues in Financial Sector

    The Hong Kong Monetary Authority (HKMA) made announcements to address sustainability issues in the financial sector.

    December 23, 2022 WebPage Regulatory News
    News

    EBA Updates Address Basel and NPL Requirements for Banks

    The European Banking Authority (EBA) published regulatory standards on identification of a group of connected clients (GCC) as well as updated the lists of identified financial conglomerates.

    December 22, 2022 WebPage Regulatory News
    News

    ESMA Publishes 2022 ESEF XBRL Taxonomy and Conformance Suite

    The General Board of the European Systemic Risk Board (ESRB), at its December meeting, issued an updated risk assessment via the quarterly risk dashboard and held discussions on key policy priorities to address the systemic risks in the European Union.

    December 22, 2022 WebPage Regulatory News
    RESULTS 1 - 10 OF 8699