The Digital Securities Sandbox (DSS) facilitates the use of developing technology such as distributed ledgers in the issuance, trading and settlement of securities in the UK.
The DSS is a regulated live environment that has been created to explore how developing technologies could be used by firms to undertake the activities of notary, maintenance and settlement for financial securities either alone, or together with the operation of a trading venue. For example, the DSS will facilitate the issuance, trading and settlement of digital securities in the UK on distributed, programmable ledgers. These activities will need to comply with regulation by the FCA and the Bank.
The Bank and the FCA operate the DSS, pursuing three overarching aims:
- Facilitate innovation: promote a safe, sustainable and efficient financial system. We are enabling the application of new technology to the trading and settlement of securities.
- Protect financial stability: limits will facilitate safe scaling of business that mitigates risks to financial stability without undermining innovation.
- Protect market integrity: the regulatory approach will continue to provide for the integrity and cleanliness of UK financial markets.
In developing the DSS, a key principle has been to ensure regulatory safeguards are proportional to the risks posed by various business models. This approach aims to prevent regulation from stifling innovation while safeguarding financial stability.
Source: Bank of England