European Securities and Markets Authority (ESMA), is looking for stakeholder input about the use of distributed ledger tech for securities trading and settlements.
Recently, the European Union’s Securities Regulator published a “call to evidence” inviting stakeholders to provide feedback on the regulations for regulatory standards (RTSs) for reporting and transparency in relation to the DLT pilot that will be implemented next year.
ESMA’s main functions include strengthening investor protection, enhancing financial markets and encouraging cooperation among members.
The EU regulator is asking for evidence to determine if the regulations concerning trade transparency, data reporting and trade transparency need to be updated to allow tokenized securities to run on DLT.
According to ESMA, the goal is to “ensure more efficient and secure management of data stored on DLTs while preserving their quality, usability, and comparability.”
Stakeholders are invited to share their opinions on how to provide regulators information about “transactions and financial instruments data” as well as transparency data.
The EU regulator will review the feedback and determine if amendments are needed to the RTS. If the answer is yes, the ESMA will consult again before submitting a final draft of the RTS to the European Commission.
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The French government asked the ESMA in July 2021 to regulate digital assets and establish uniform regulations. According to the Autorite des marches financiers, regulations are a prerequisite for a strong and independent European Union that can compete at the global level.
The ESMA published a September 2021 report that cited market exuberance and increased risk-taking as the reasons for volatility in crypto assets during the first half 2021. This raises concerns about investor protection.