Clifford Chance

Innovation in the UK Capital Markets – The FMI sandbox takes shape

12 September 2022

The UK Financial Services and Markets Bill 2022 includes proposals to grant HM Treasury the power to create sandboxes which would allow financial market infrastructures and other designated persons, to test and adopt new technologies and practices (such as distributed ledger technology) by temporarily disapplying, modifying or even applying certain legislation for specific purposes.

This is an important step towards ensuring that financial market infrastructures in the UK are able to fully embrace technological innovation as part of a wider effort to ensure that the UK financial system, including  capital markets, continues to be an attractive option for the full spectrum of market actors (e.g. operators of financial market infrastructures, technology developers, issuers, investors and financial intermediaries).

This briefing provides an initial look at the parallels between the FMI sandbox and its EU equivalent, the EU Pilot Regime. Both regimes are expected to give rise to an increase in the frequency of issuances of DLT Financial Instruments.

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