The International Capital Market Association (ICMA) has suggested a number of amendments to the FCA and Bank of England’s proposal to implement and operate the digital securities sandbox.
While the association is in broad support of the initiative, it recommends a more flexible approach to applying limits for live transactions, considered on a firm-by-firm basis. It also asks that participants are able to scale on a continuous basis, and that the scope of securities within the sandbox is expanded to cover non-sterling currencies. It notes that “this is considered key to ensure commercial liability for Sandbox entrants”.
ICMA adds that it would be beneficial to have a more tailored approach for regulated users, allowing them to bypass certain requirements that they already meet outside of the sandbox environment.
Final rules need to be reviewed and adjusted in line with outcomes from the sandbox, the association says. It adds that regulators need to coordinate their approaches when considering permanent legislative changes made by the Treasury and firms leaving the sandbox, “in order to avoid undue delays or cliff-edge risks”.
Activity within the sandbox should not prevent the same or similar activity from taking place outside of it subject to different structures choices, it continued, and if an alternative framework for non-systemically relevant CSDs is established it advises that the rules are calibrated for both these and systemically relevant participants.
ICMA’s responses are based on the views of its DLT bonds working group, which comprises investors, banks, market infrastructures and law firms across international debt capital markets. The group aims to support the development of scalable, efficient and liquid cross-border DLT bond markets.
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