The Bank of England (BoE) has published a consultation paper on the Digital Securities Sandbox (DSS). The document underscores the proposals by the Financial Conduct Authority (FCA) and BoE to implement and operate the DSS over the forthcoming five years.
As per a BoE press release, the DSS will enable firms to utilise technologies like distributed ledger technology for issuing, trading, and settling securities. These securities encompass equities, corporate and government bonds, money market instruments, units in collective investments, and emissions allowances. The consultation paper delineates the FCA and BoE's plans to put into operation and manage the DSS. It further provides details about the application process for entering the sandbox, usage of rule-making powers, managing financial stability and market integrity risks within the sandbox, supervision and enforcement measures, as well as fees.
According to the same press release from BoE, the DSS is slated to operate for five years. It will be utilised to devise a permanent regime for the securities market. In this collaborative endeavour, both BoE and FCA will jointly operate the DSS.
The press release also indicates that responses to this consultation paper will be accepted until May 29, 2024. After this review period concludes, both BoE and FCA plan to formally respond to feedback received during this consultation phase before publishing final guidance and rules. They anticipate opening up applications for DSS during this summer.