The ESMA Report: Distributed Ledger Technology Applied to Securities Markets outlines the organisation’s views on Distributed Ledger Tech (DLT) in terms of its potential applications, benefits, risks, and its relation to existing EU regulation. Based on its assessment, the ESMA came to the conclusion that regulatory action is premature due to the early stage that DLT is still in.

This past month the European Securities and Market Authority (ESMA) published a lengthy report exploring the potential for applying distributed ledger technology to securities markets. The organisation sees enormous potential for DLT, and believes that it could benefit financial markets in numerous ways, for instance through more efficient post-trade services, enhanced reporting capabilities, and reduced costs.

The ESMA has indicated that it expects early applications of DLT to focus on optimising processes using the current market structure. In addition to outlining potential benefits of DLT, the organisation also noted important challenges in terms of interoperability, governance and privacy issues and risk creation. The report is careful to stress that these challenges must be addressed before any large-scale use of DLT can be effectively applied across the financial services sector.

If you are interested in learning more about the ESMA’s vision for the future applications of distributed ledger technology to securities markets, click here.