LSEG Digital Securities Depositary Wins Gate 2 Sandbox Approval

London Stock Exchange Group (LSEG) said its Digital Securities Depositary (DSD) has received approval under the UK Digital Securities Sandbox (DSS) to perform core and ancillary DSD functions.

The Gate 2 Sandbox Approval Notice (SAN) covers notary, maintenance and settlement functions. It also extends to settlement services through a standard link between LSEG’s Digital Securities Depository and HSBC Bank plc’s Digital Securities Depository, HSBC Orion, for instruments including DIGIT. That link is subject to the SFR2 designation approvals for HSBC and LSEG.

LSEG’s DSD intends to offer cash-leg settlement through LSEG’s DiSH for transactions executed on the platform, including for the DIGIT pilot. The group said it aims to support additional cash settlement options over time as market demand and the regulatory landscape evolve.

LSEG described the SAN approval as a significant milestone in the development of UK digital market infrastructure and an important step towards its DSD supporting investor access for DIGIT within a regulated environment as an Investor DSD.

DIGIT will explore how distributed ledger technology can be applied across the lifecycle of the debt issuance process, with the aim of catalysing the development of DLT in UK financial markets.

Daniel Maguire, Group Head of LSEG Markets and CEO of LCH Group, said the approval is an important milestone for LSEG and for the development of digital financial markets in the UK. He said combining the DSD’s capabilities with DiSH’s cash settlement solution is intended to help create the foundations for more efficient, transparent and interoperable digital capital markets, and that LSEG looks forward to working with the government and market participants as the pilot progresses.