Market News

LONDON, April 3 (Reuters) - Britain's financial regulators on Wednesday launched a public consultation on their new "sandbox" for trading digital securities in "real world situations" to keep up with rapid advances in technology.

A "sandbox" allows the testing of new services in the market with real customers, but within a controlled regulatory environment.
The Bank of England and Financial Conduct Authority said in joint proposals that within the sandbox, existing financial rules would be modified to enable companies to try out new technology, such as distributed ledger technology or blockchain that underpins cryptoassets, for trading and settling digitised bonds and stocks. 

The regulators are consulting on draft guidance on how firms would apply to operate within the sandbox, and scale up activities . "For the first time, they will be able to provide these services from a single legal entity," the BoE and FCA said. "The adoption of new technology in this area, if done safely, could lead to a technological transformation that will promote greater efficiency as well as greater resilience in the financial system in the long run." 

The new sandbox will last five years and could lead to a new permanent regulatory regime for securities settlement, whereby ownership of a stock or bond is swapped for cash. The consultation is open until May 29, with final guidance published in the summer.