Italian Securities Commission and French Financial Markets Authority propose reforms to strengthen the EU DLT Pilot Regime

The Italian Securities Commission and the French Financial Markets Authority have submitted joint proposals to the European Commission and EU co-legislators to revise the EU Pilot Regime for market infrastructures based on distributed ledger technology, aiming to make the framework more competitive and effective for real-world DLT experimentation. The regulators noted that, despite growing interest and the regime’s entry into force in March 2023, market uptake has remained marginal. The proposals focus on three areas. First, they call for a more flexible and proportionate approach calibrated to the size and nature of projects, with a stronger role for the European Securities and Markets Authority to support consistent practices across the EU, and broader authorisation for electronic money tokens and tokenised deposits for settlement alongside rapid implementation of a safe, efficient centralised money settlement option for DLT-issued assets. Second, they propose raising eligibility and capitalisation limits for infrastructures to enable larger-scale testing, empowering ESMA to review those limits more quickly as markets evolve, expanding eligible assets to include products such as structured bonds and some derivatives, and extending the regime’s duration while clarifying exit arrangements. Third, they highlight the need for interoperability between DLT-based infrastructures and traditional systems through EU-level common standards, and for greater awareness among issuers and investors of the option to list financial assets on DLT.