On 11 July 2023, HM Treasury published a consultation paper on the first financial market infrastructure sandbox, referred to as the Digital Securities Sandbox (DSS).

The consultation sets out HM Treasury’s proposed approach to delivering a DSS, which will be the first financial market infrastructure sandbox delivered under the powers granted as part of the Financial Services and Markets Act 2023.

The DSS is intended to facilitate the testing and adoption of digital securities across financial markets. Through the DSS, industry will be able to set up financial market infrastructures that utilise digital asset technology, which can perform a number of activities in relation to digital securities under a temporarily modified legislative and regulatory framework.

As well as inviting feedback from industry on the approach to the DSS and some further policy and legal issues, the consultation also invites respondents to formally express their interest in using the DSS, on the basis that conversations with potential applicants should begin as early as possible.

The deadline for feedback to this consultation is 21 August 2023.