The European Securities and Markets Authority (ESMA)’s Distributed Ledger Technology (DLT) Pilot regime is now applicable. The Pilot allows some exemptions from the EU’s MiFIR and CSDR regimes, making it easier for market participants to trial DLT when trading and settling financial instruments. The Pilot also helps bring pre- and post-trade transparency and market abuse monitoring to DLT-based securities.
As part of the Pilot, ESMA recommends the International Standards Organisation (ISO) standard 24165 Digital Token Identifier (DTI) codes, issued by the DTI Foundation (DTIF) as a compensatory measure.
ESMA updated its Q&As, recommending that trading venues, investment firms and approved publication arrangements (APAs) complement the ISIN by including the Digital Token Identifier (DTI) when publishing post-trade information for equity and equity-like instruments and non-equities.
DTIF and the Association of National Numbering Agencies (ANNA), ISO Registration Authority for ISO 6166 International Securities Identification Numbers (ISINs), have been running a joint task force set up to explore the synergies between DTIs and ISINs. The task force has recommended close cooperation between the registration authorities and has been working on identifying security tokens with existing ISINs so that these can be issued DTIs. So far, over fifty such tokens have been identified, verified and added to the DTI registry. The task force will continue its work to ensure that participants in the DLT Pilot can meet ESMA’s recommendations.
Sassan Danesh, CEO of Etrading Software, said in a statement: “The DTI standard is critical to help industry know what they are dealing with. They continue to adopt the standard to help build increased transparency and clarity in the market. ESMA’s pilot today signals the importance given to pre- and post-trade transparency and protecting industry against market abuse.”
Stephan Dreyer, managing director of ANNA, said in a statement: “Working with the DTIF, ANNA is building interoperability between the ISIN and DTI, harmonising standards in this space. The ISIN standard (ISO 6166) will continue to provide unique instrument identification as it has for the past forty years and incorporate new assets, including digital assets.”