The new DLT trading system

At its meeting on 18 June 2021, the Federal Council enacted the new Act on the Adaptation of Federal Law to Developments in Distributed Electronic Register Technology (DLT Act) as of 1 August 2021. In addition, the associated jacket ordinance also entered into force on 1 August 2021. The new law and the jacket ordinance provide for various improvements to the legal framework in the use of decentralized technologies such as blockchain. This also includes the newly introduced register value right and the DLT trading system. 

The most significant change is the introduction of the new DLT trading system. This is a new form of license for trading venues. The requirements for obtaining this license are based on the requirements for financial market infrastructures. These include requirements for an organization, guarantors, business continuity, etc. In addition, the exact conditions apply to DLT trading systems as to ordinary trading venues. Should a DLT trading system also perform the services of a central securities depository, the requirements that exist for central securities depositories also apply.

Compared to the previous trading systems, the new DLT trading system enables trading in DLT effects and other digital assets such as cryptocurrencies. As indicated, it will also be possible to hold DLT securities in custody and settle and transact with them. In addition, the new DLT trading system will also allow retail customers to be admitted as participants. Based on the new license type, more participants can be connected. This can also lead to DLT effects no longer being traded exclusively via the bank but by the customer himself. These new activities give Switzerland a significant advantage over other countries. Since trading and custody of DLT effects via blockchain in Switzerland now have a clear legal framework, this leads to a regulated adaptation to technological change. As an innovative pioneer, Switzerland can thus strengthen the trading centre and attract forward-looking companies in the fintech sector.