Regulation (EU) 2022/858 of the European Parliament and of the Council of 30 May 2022 on a pilot regime for market infrastructures based on distributed ledger technology, and amending Regulations (EU) No 600/2014 and (EU) No 909/2014 and Directive 2014/65/EU (Text with EEA relevance)

Those guidelines shall ensure investor protection, market integrity and financial stability.

ESMA shall periodically update those guidelines.

(a) there are significant risks to investor protection, market integrity or financial stability that are not properly addressed and mitigated by the applicant;

(b) the specific permission to operate a DLT MTF and the exemptions requested are being sought for the purpose of circumventing legal or regulatory requirements; or

(c) the operator of the DLT MTF will not be able to comply, or will not allow its users to comply, with applicable provisions of Union law or provisions of national law falling outside the scope of Union law.

The competent authority shall inform ESMA of the grant, refusal or withdrawal of a specific permission under this Article without delay, including any information specified under the first subparagraph of this paragraph.

ESMA shall publish on its website:

(a) the list of DLT MTFs, the start and end dates of their specific permissions, the list of exemptions granted to each of them, and any lower thresholds set by competent authorities for each of them; and

(b) the total number of requests for exemptions that have been made under Article 4, indicating the number and types of exemptions granted or refused, together with the justifications for any refusals.

The information referred to in the third subparagraph, point (b), shall be published on an anonymous basis.

(a) a flaw has been discovered in the functioning of the distributed ledger technology used, or in the services and activities provided by the operator of the DLT MTF, that poses a risk to investor protection, market integrity or financial stability, and the risk outweighs the benefits of the services and activities under experimentation;

(b) the operator of the DLT MTF has breached the conditions attached to the exemptions;

(c) the operator of the DLT MTF has admitted to trading financial instruments that do not fulfil the conditions set out in Article 3(1);

(d) the operator of the DLT MTF has exceeded the threshold referred to in Article 3(2);

(e) the operator of the DLT MTF has exceeded the threshold referred to in Article 3(3) and has not activated the transition strategy; or

(f) the operator of the DLT MTF obtained the specific permission or related exemptions on the basis of misleading information or a material omission.

Where an operator of a DLT MTF requests a new specific permission, exemption or modification, the procedure set out in Article 4 shall apply. That request shall be processed by the competent authority in accordance with this Article.

Article 9

Specific permission to operate a DLT SS

(a) the applicant’s business plan, the rules of the DLT SS and any legal terms as referred to in Article 7(1), as well as information regarding the functioning, services and activities of the DLT SS as referred to in Article 7(3);

(b) a description of the functioning of the distributed ledger technology used, as referred to in Article 7(2);

(c) a description of the applicant’s overall IT and cyber arrangements as referred to in Article 7(4);

(d) evidence that the applicant has in place sufficient prudential safeguards to meet its liabilities and to compensate its clients, as referred to in Article 7(6), third subparagraph;

(e) where applicable, a description of the safekeeping arrangements for clients’ DLT financial instruments as referred Article 7(5);

(f) a description of the arrangements for ensuring investor protection and a description of the mechanisms for handling client complaints and redress, as referred to in Article 7(6), second subparagraph;

(g) the applicant’s transition strategy; and

(h) the exemptions that the applicant is requesting under Article 5, the justification for each exemption requested and any compensatory measures proposed and the means by which it intends to comply with the conditions attached to those exemptions.

As soon as the competent authority considers the application to be complete, it shall send a copy of that application to:

(a) ESMA; and

(b) the relevant authorities specified in Article 12 of Regulation (EU) No 909/2014.

Before issuing a non-binding opinion, ESMA shall consult the competent authorities of the other Member States and shall take the utmost account of their views when issuing its opinion.

Where ESMA issues a non-binding opinion, the competent authority shall give that opinion due consideration and shall provide ESMA with a statement regarding any significant deviations from that opinion if ESMA so requests. ESMA’s opinion and the competent authority’s statement shall not be made public.

The relevant authorities specified in Article 12 of Regulation (EU) No 909/2014 shall provide the competent authority with a non-binding opinion on the features of the DLT SS operated by the applicant within 30 calendar days of receiving a copy of that application.

(a) exemptions granted to CSDs operating DLT SSs throughout the Union, including in the context of evaluating the adequacy of different types of distributed ledger technology used by market operators for the purposes of this Regulation; and

(b) the exercise of the option provided for in Article 3(6).

Those guidelines shall ensure investor protection, market integrity and financial stability.

ESMA shall periodically update those guidelines.

(a) there are significant risks to investor protection, market integrity or financial stability that are not properly addressed and mitigated by the applicant;

(b) the specific permission to operate a DLT SS and the exemptions requested are being sought for the purpose of circumventing legal or regulatory requirements; or

(c) the CSD will not be able to comply, or will not allow its users to comply, with applicable provisions of Union law or provisions of national law falling outside the scope of Union law.

The competent authority shall inform ESMA and the relevant authorities specified in paragraph 7 of this Article of the grant, refusal or withdrawal of a specific permission under this Article without delay, including any information specified under the first subparagraph of this paragraph.

ESMA shall publish on its website:

(a) the list of DLT SSs, the start and end dates of their specific permissions, the list of exemptions granted to each of them, and any lower thresholds set by the competent authorities for each of them; and

(b) the total number of requests for exemptions that have been made under Article 5, indicating the number and types of exemptions granted or refused, together with the justifications for any refusals.

The information referred to in the third subparagraph, point (b), shall be published on an anonymous basis.

(a) a flaw has been discovered in the functioning of the distributed ledger technology used, or in the services and activities provided by the CSD operating the DLT SS, that poses a risk to investor protection, market integrity or financial stability, and the risk outweighs the benefits of the services and activities under experimentation;

(b) the CSD operating the DLT SS has breached the conditions attached to the exemptions;

(c) the CSD operating the DLT SS has recorded financial instruments that do not fulfil the conditions set out in Article 3(1);

(d) the CSD operating the DLT SS has exceeded the threshold referred to in Article 3(2);

(e) the CSD operating the DLT SS has exceeded the threshold referred to in Article 3(3) and has not activated the transition strategy; or

(f) the CSD operating the DLT SS obtained the specific permission or related exemptions on the basis of misleading information or a material omission.

Where a CSD operating a DLT SS requests a new specific permission, exemption or modification, the procedure set out in Article 5 shall apply. That request shall be processed by the competent authority in accordance with this Article.

Article 10

Specific permission to operate DLT TSS

(a) the applicant’s business plan, the rules of the DLT TSS and any legal terms as referred to in Article 7(1), as well as information regarding the functioning, services and activities of the DLT TSS as referred to in Article 7(3);

(b) a description of the functioning of the distributed ledger technology used, as referred to in Article 7(2);

(c) a description of the applicant’s overall IT and cyber arrangements as referred to in Article 7(4);

(d) evidence that the applicant has in place sufficient prudential safeguards to meet its liabilities and to compensate its clients, as referred to in Article 7(6), third subparagraph;

(e) where applicable, a description of the safekeeping arrangements for clients’ DLT financial instruments as referred to in Article 7(5);

(f) a description of the arrangements for ensuring investor protection and a description of the mechanisms for handling client complaints and redress, as referred to in Article 7(6), second subparagraph;

(g) the applicant’s transition strategy; and

(h) the exemptions that the applicant is requesting under Article 6, the justification for each exemption requested and any compensatory measures proposed and the means by which it intends to comply with the conditions attached to those exemptions.

In addition to the information referred to in paragraph 4 of this Article, an applicant that intends to operate a DLT TSS as a CSD shall submit the information on how it intends to comply with the applicable requirements of Directive 2014/65/EU as referred to in Article 6(2) of this Regulation, except for information that would be necessary to demonstrate compliance with requirements in respect of which the applicant has requested an exemption in accordance with that Article.

As soon as the competent authority considers the application to be complete, it shall send a copy of that application to:

(a) ESMA; and

(b) the relevant authorities specified in Article 12 of Regulation (EU) No 909/2014.

Before issuing a non-binding opinion, ESMA shall consult the competent authorities of the other Member States and shall take the utmost account of their views when issuing its opinion.

Where ESMA issues a non-binding opinion, the competent authority shall give that opinion due consideration and shall provide ESMA with a statement regarding any significant deviations from that opinion if ESMA so requests. ESMA’s opinion and the competent authority’s statement shall not be made public.

The relevant authorities specified in Articles 12 of Regulation (EU) No 909/2014 shall provide the competent authority with a non-binding opinion on the features of the DLT TSS operated by the applicant within 30 calendar days of receiving a copy of that application.

(a) there are significant risks to investor protection, market integrity or financial stability that are not properly addressed and mitigated by the applicant;

(b) the specific permission to operate a DLT TSS and the exemptions requested are being sought for the purpose of circumventing legal or regulatory requirements; or

(c) the operator of DLT TSS will not be able to comply, or will not allow its users to comply, with applicable provisions of Union law or provisions of national law falling outside the scope of Union Law.

The competent authority shall inform ESMA and the relevant authorities specified in Article 12 of Regulation (EU) No 909/2014 of the grant, refusal, or withdrawal of a specific permission under this Article without delay, including any information specified under the first subparagraph of this paragraph.

ESMA shall publish on its website:

(a) the list of DLT TSSs, the start and end dates of their specific permissions, the list of exemptions granted to each of them, and any lower thresholds set by competent authorities for each of them; and

(b) the total number of requests for exemptions that have been made under Article 6, indicating the number and types of exemptions granted or refused, together with the justifications for any refusals.

The information referred to in the third subparagraph, point (b), shall be published on an anonymous basis.

(a) a flaw has been discovered in the functioning of the distributed ledger technology used, or in the services and activities provided by the operator of a DLT TSS that poses a risk to investor protection, market integrity or financial stability, and the risk outweighs the benefits of the services and activities under experimentation;

(b) the operator of the DLT TSS has breached the conditions attached to the exemptions;

(c) the operator of the DLT TSS has admitted to trading or recorded financial instruments that do not fulfil the conditions set out in Article 3(1);

(d) the operator of the DLT TSS has exceeded the threshold referred to in Article 3(2);

(e) the operator of the DLT TSS has exceeded the threshold referred to in Article 3(3) and has not activated the transition strategy; or

(f) the operator of the DLT TSS obtained the specific permission or related exemptions on the basis of misleading information or a material omission.

Where an operator of a DLT TSS requests a new specific permission, exemption or modification, the procedure set out in Article 6 shall apply. That request shall be processed by the competent authority in accordance with this Article.

Article 11

Cooperation between operators of DLT market infrastructures, competent authorities and ESMA

In particular, operators of DLT market infrastructures shall notify their competent authorities upon becoming aware of any of the following matters, without delay:

(a) any proposed material change to their business plan, including changes in relation to critical staff, the rules of the DLT market infrastructure and the legal terms;

(b) any evidence of unauthorised access, material malfunctioning, loss, cyber-attacks or other cyber-threats, fraud, theft or other serious malpractice suffered by the operator of the DLT market infrastructure;

(c) any material change to the information provided to the competent authority;

(d) any technical or operational difficulties in performing the activities or providing the services that are subject to the specific permission, including difficulties related to the development or use of the distributed ledger technology and DLT financial instruments; or

(e) any risks affecting investor protection, market integrity or financial stability that have arisen and that were not anticipated in the application requesting the specific permission or that were not anticipated at the time when the specific permission was granted.

Changes referred to in the second subparagraph, point (a) shall be notified at least four months before the change is planned, regardless of whether the proposed material change requires a change to the specific permission or related exemptions or conditions attached to those exemptions in accordance with Article 8, 9 or 10.

Where notified of the matters listed in the second subparagraph, points (a) to (e), the competent authority may require the operator of the DLT market infrastructure to make an application in accordance with Article 8(13), Article 9(13) or Article 10(13), or may require the operator of the DLT market infrastructure to take corrective measures as referred to in paragraph 3 of this Article.

(a) a summary of the information listed in paragraph 1, second subparagraph;

(b) the number and value of DLT financial instruments admitted to trading on the DLT MTF or DLT TSS and the number and value of DLT financial instruments recorded by the operator of the DLT SS or DLT TSS;

(c) the number and value of transactions traded on the DLT MTF or DLT TSS and settled by the operator of the DLT SS or DLT TSS;

(d) a reasoned assessment of any difficulties in applying Union financial services legislation or national law; and

(e) any actions taken to implement the conditions attached to the exemptions or to implement any compensatory or corrective measures required by the competent authority.

Competent authorities shall forward to ESMA the information and reports received from operators of DLT market infrastructures pursuant to paragraphs 1, 2 and 4 of this Article in a timely manner, and shall inform ESMA of any measures taken pursuant to paragraph 3 of this Article.

ESMA shall inform competent authorities on a regular basis of:

(a) any reports submitted pursuant to paragraph 4 of this Article;

(b) any specific permissions and exemptions granted under this Regulation as well as the conditions attached to those exemptions;

(c) any refusal by a competent authority to grant a specific permission or exemption, any withdrawal of a specific permission or exemption and any cessations of business of a DLT market infrastructure.

Article 12

Designation of competent authorities

Article 13

Notification of competent authorities

The Member States shall notify any competent authorities within the meaning of Article 2, point (21)(c), to ESMA and the Commission. ESMA shall publish a list of those competent authorities on its website.

Article 14

Report and review

(a) the functioning of DLT market infrastructures throughout the Union;

(b) the number of DLT market infrastructures;

(c) the types of exemption requested by DLT market infrastructures and the types of exemption granted;

(d) the number and value of DLT financial instruments that are admitted to trading and that are recorded on DLT market infrastructures;

(e) the number and value of transactions traded or settled on DLT market infrastructures;

(f) the types of distributed ledger technology used and technical issues related to the use of distributed ledger technology, including the matters listed in Article 11(1), second subparagraph, point (b), and on the impact of the use of distributed ledger technology on the climate policy objectives of the Union;

(g) the procedures put in place by operators of DLT SSs or DLT TSSs in accordance with Article 5(3), point (b);

(h) any risks, vulnerabilities or inefficiencies posed by the use of distributed ledger technology to investor protection, market integrity or financial stability, including any novel types of legal, systemic and operational risks, which are not sufficiently addressed by Union financial services legislation, and any other unintended effects on liquidity, volatility, investor protection, market integrity or financial stability;

(i) any risks of regulatory arbitrage or issues affecting the level playing field between DLT market infrastructures under the pilot regime provided for in this Regulation and between DLT market infrastructures and other market infrastructures using legacy systems;

(j) any issues relating to interoperability between DLT market infrastructures and other infrastructures using legacy systems;

(k) any benefits and costs resulting from the use of a distributed ledger technology in terms of additional liquidity and financing for start-ups and small- and medium-sized enterprises, safety and efficiency improvements, energy consumption and risk mitigation throughout the entire trading and post-trading chain, including with regard to the recording and safekeeping of DLT financial instruments, the traceability of transactions and enhanced compliance with know-your-customer and anti-money laundering processes, corporate actions and direct exercise of investor rights by means of smart contracts, and reporting and supervisory functions at the level of the DLT market infrastructure;

(l) any refusals to grant specific permissions or exemptions, any modifications or withdrawals of such specific permissions or exemptions as well as any compensatory or corrective measures;

(m) any cessation of business by a DLT market infrastructure and the reasons for that cessation of business;

(n) the appropriateness of the thresholds referred to in Article 3 and Article 5(8), including the potential implications resulting from an increase of those thresholds, taking into account, in particular, systemic considerations and different types of distributed ledger technology; and

(o) an overall assessment of the costs and benefits of the pilot regime provided for in this Regulation and a recommendation whether, and under which conditions, to continue this pilot regime.

(a) extended for a further period of up to three years;

(b) extended to other types of financial instrument that can be issued, recorded, transferred or stored using a distributed ledger technology;

(c) amended;

(d) made permanent through appropriate amendments of the relevant Union financial services legislation; or

(e) terminated, including all specific permissions granted under this Regulation.

In its report, the Commission may propose any appropriate amendment to Union financial services legislation or any harmonisation of national laws that would facilitate the use of distributed ledger technology in the financial sector, as well as any measures needed for the transition of DLT market infrastructures away from the pilot regime provided for in this Regulation.

In the event that this pilot regime is extended for a further period as provided for in the first subparagraph, point (a), of this paragraph, the Commission shall ask ESMA to submit an additional report in accordance with paragraph 1 no later than three months before the end of the extension period. Upon receipt of that report, the Commission shall submit to the European Parliament and the Council an additional report in accordance with this paragraph.

Article 15

Interim reports

ESMA shall publish annual interim reports in order to provide market participants with information on the functioning of the markets, to address incorrect behaviour of operators of DLT market infrastructures, to provide clarifications on the application of this Regulation and to update previous indications based on the evolution of distributed ledger technology. Those reports shall also provide an overall description of the application of the pilot regime provided for in this Regulation, focusing on trends and emerging risks, and shall be submitted to the European Parliament, the Council and the Commission. The first such report shall be published by 24 March 2024.

Article 16

Amendment to Regulation (EU) No 600/2014

In Article 54(2) of Regulation (EU) No 600/2014, the first subparagraph is replaced by the following:

‘If the Commission concludes that there is no need to exclude exchange-traded derivatives from the scope of Articles 35 and 36 in accordance with Article 52(12), a CCP or a trading venue may, before 22 June 2022, apply to its competent authority for permission to avail itself of transitional arrangements. The competent authority, taking into account the risks to the orderly functioning of the relevant CCP or trading venue resulting from the application of the access rights under Article 35 or 36 as regards exchange-traded derivatives, may decide that Article 35 or 36 does not apply to the relevant CCP or trading venue, respectively, in respect of exchange-traded derivatives, for a transitional period until 3 July 2023. Where the competent authority decides to approve such a transitional period, the CCP or trading venue shall not benefit from the access rights under Article 35 or 36 as regards exchange-traded derivatives for the duration of the transitional period. The competent authority shall notify ESMA and, in the case of a CCP, the college of competent authorities for that CCP, whenever it approves a transitional period.’.

Article 17

Amendment to Regulation (EU) No 909/2014

In Article 76(5) of Regulation (EU) No 909/2014, the first subparagraph is replaced by the following:

‘Each of the settlement discipline measures referred to in Article 7(1) to (13) shall apply from the date of application specified for each settlement discipline measure in the delegated act adopted by the Commission pursuant to Article 7(15).’.

Article 18

Amendments to Directive 2014/65/EU

Directive 2014/65/EU is amended as follows:

(2) in Article 93, the following paragraph is inserted: ‘3a.   By 23 March 2023, Member States shall adopt and publish the provisions necessary to comply with point (15) of Article 4(1) and shall communicate them to the Commission. They shall apply those provisions from 23 March 2023. By way of derogation from the first subparagraph, Member States that cannot adopt provisions necessary to comply with point (15) of Article 4(1) by 23 March 2023, because their legislative procedures take more than nine months, shall benefit from an extension of a maximum of six months from 23 March 2023, provided that they notify the Commission of their need to make use of that extension by 23 March 2023.’.

Article 19

Entry into force and application

(a) Articles 8(5), 9(5), 10(6) and 17, which shall apply from 22 June 2022; and

(b) Article 16, which shall apply from 4 July 2021.

This Regulation shall be binding in its entirety and directly applicable in all Member States.

Done at Brussels, 30 May 2022.

For the European Parliament The President R. METSOLA

For the Council The President B. LE MAIRE

(1) OJ C 244, 22.6.2021, p. 4.

(2) OJ C 155, 30.4.2021, p. 31.

(3) Position of the European Parliament of 24 March 2022 (not yet published in the Official Journal) and decision of the Council of 12 April 2022.

(4) Directive 2014/65/EU of the European Parliament and of the Council of 15 May 2014 on markets in financial instruments and amending Directive 2002/92/EC and Directive 2011/61/EU (OJ L 173, 12.6.2014, p. 349).

(5) Regulation (EU) No 236/2012 of the European Parliament and of the Council of 14 March 2012 on short selling and certain aspects of credit default swaps (OJ L 86, 24.3.2012, p. 1).

(6) Regulation (EU) No 596/2014 of the European Parliament and of the Council of 16 April 2014 on market abuse (market abuse regulation) and repealing Directive 2003/6/EC of the European Parliament and of the Council and Commission Directives 2003/124/EC, 2003/125/EC and 2004/72/EC (OJ L 173, 12.6.2014, p. 1).

(7) Regulation (EU) No 909/2014 of the European Parliament and of the Council of 23 July 2014 on improving securities settlement in the European Union and on central securities depositories and amending Directives 98/26/EC and 2014/65/EU and Regulation (EU) No 236/2012 (OJ L 257, 28.8.2014, p. 1).

(8) Regulation (EU) 2017/1129 of the European Parliament and of the Council of 14 June 2017 on the prospectus to be published when securities are offered to the public or admitted to trading on a regulated market, and repealing Directive 2003/71/EC (OJ L 168, 30.6.2017, p. 12).

(9) Directive 98/26/EC of the European Parliament and of the Council of 19 May 1998 on settlement finality in payment and securities settlement systems (OJ L 166, 11.6.1998, p. 45).

(10) Directive 2013/50/EU of the European Parliament and of the Council of 22 October 2013 amending Directive 2004/109/EC of the European Parliament and of the Council on the harmonisation of transparency requirements in relation to information about issuers whose securities are admitted to trading on a regulated market, Directive 2003/71/EC of the European Parliament and of the Council on the prospectus to be published when securities are offered to the public or admitted to trading and Commission Directive 2007/14/EC laying down detailed rules for the implementation of certain provisions of Directive 2004/109/EC (OJ L 294, 6.11.2013, p. 13).

(11) Regulation (EU) No 1095/2010 of the European Parliament and of the Council of 24 November 2010 establishing a European Supervisory Authority (European Securities and Markets Authority), amending Decision No 716/2009/EC and repealing Commission Decision 2009/77/EC (OJ L 331, 15.12.2010, p. 84).

(12) Regulation (EU) No 600/2014 of the European Parliament and of the Council of 15 May 2014 on markets in financial instruments and amending Regulation (EU) No 648/2012 (OJ L 173, 12.6.2014, p. 84).

(13) Directive (EU) 2019/1937 of the European Parliament and of the Council of 23 October 2019 on the protection of persons who report breaches of Union law (OJ L 305, 26.11.2019, p. 17).

(14) Regulation (EU) 2016/679 of the European Parliament and of the Council of 27 April 2016 on the protection of natural persons with regard to the processing of personal data and on the free movement of such data, and repealing Directive 95/46/EC (General Data Protection Regulation) (OJ L 119, 4.5.2016, p. 1).

(15) Regulation (EU) 2018/1725 of the European Parliament and of the Council of 23 October 2018 on the protection of natural persons with regard to the processing of personal data by the Union institutions, bodies, offices and agencies and on the free movement of such data, and repealing Regulation (EC) No 45/2001 and Decision No 1247/2002/EC (OJ L 295, 21.11.2018, p. 39).

(16) Regulation (EU) 2021/23 of the European Parliament and of the Council of 16 December 2020 on a framework for the recovery and resolution of central counterparties and amending Regulations (EU) No 1095/2010, (EU) No 648/2012, (EU) No 600/2014, (EU) No 806/2014 and (EU) 2015/2365 and Directives 2002/47/EC, 2004/25/EC, 2007/36/EC, 2014/59/EU and (EU) 2017/1132 (OJ L 22, 22.1.2021, p. 1).

(17) Regulation (EU) No 575/2013 of the European Parliament and of the Council of 26 June 2013 on prudential requirements for credit institutions and amending Regulation (EU) No 648/2012 (OJ L 176, 27.6.2013, p. 1).

(18) Regulation (EU) 2019/2033 of the European Parliament and of the Council of 27 November 2019 on the prudential requirements of investment firms and amending Regulations (EU) No 1093/2010, (EU) No 575/2013, (EU) No 600/2014 and (EU) No 806/2014 (OJ L 314, 5.12.2019, p. 1).

(19) Directive (EU) 2019/2034 of the European Parliament and of the Council of 27 November 2019 on the prudential supervision of investment firms and amending Directives 2002/87/EC, 2009/65/EC, 2011/61/EU, 2013/36/EU, 2014/59/EU and 2014/65/EU (OJ L 314, 5.12.2019, p. 64).