Digital ledger technology ("DLT") and blockchains in particular could disintermediate some of the main financial markets post-trade processes, fund distribution and the asset-servicing value chain more generally, authors and experts say. Certain authors believe that markets would become more efficient if the holding, clearing and settlement of securities as well as post-trade reporting were made through blockchains. These new technologies would also provide greater transparency for regulators (including with respect to KYC/AML) and investors and would eliminate a number of risks associated with intermediation.

As one of the first cornerstones of the Luxembourg legal landscape in relation to DLT's impact on the financial sector, the Luxembourg government published a Bill of Law 7363 ("Bill of Law") on 27 September 2018 which was approved by Parliament on 14 February 2019 ("Amendment") inserting a new Article 18bis into the amended Luxembourg Law of 1 August 2001 concerning the circulation of securities ("2001 Law").

The Amendment provides additional legal certainty by expressly allowing securities to be registered and held via secure electronic registration devices, including distributed electronic registers or databases. The Amendment solely relates to the holding and circulation of securities and therefore does not intend to govern online issuance of securities or ICOs for example (the issuance of securities is not the subject matter of the 2001 Law).

The Amendment was taken as part of Luxembourg's efforts to promote digitalisation and the use of new technologies, and it remains the go-to technology hub in Europe in all fields including the circulation of securities.

For more details regarding the Bill of Law, see the article " Bill of Law 7363 was approved on 14 February 2019 – Luxembourg's confirmation that securities can be held through DLT-like technologies, including blockchains!" published on our website.

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