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ESMA Starts Discussion on Blockchain Implications for Securities Markets

Posted on July 15, 2016 by Dave Nitchman

Links of bicycle chain. Links of a bicycle chain on a white background.

The European Securities and Markets Authority (ESMA) has released a discussion paper examining the implications of Distributed Ledger Technology (DLT) when applied to securities markets, including the possible benefits, risks and challenges. Also known as “Smart Ledgers”, these blockchain backed digital ledgers allow for varying permission levels and increased functionality, leading them to be used in entirely new ways (and posing new challenges for regulators). For a good explanation of blockchain and smart ledgers, see the presentations from a recent XBRL US event on the subject.

In the discussion paper, ESMA examines DLT in light of its own regulatory framework and its mandate to provide important safeguards for well-functioning securities markets. They are especially interested in hearing from technologists from FinTech companies and any financial institutions interested in the use of blockchain technology in securities markets, including banks, central counterparties, central securities depositaries, custodians, asset managers, and investors, The paper may be found here.

This is a very important topic and we urge you to both read the paper and check out the videos from the recent event on Crowdfunding, which is another FinTech innovation posing interesting opportunities and challenges for investors and regulators alike.

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