Registration of DLT Financial Instruments on the Luxembourg Stock Exchange’s Securities Official List

On 31 January 2022, the Luxembourg Stock Exchange (LuxSE) published new guidelines for the registration of DLT Financial Instruments on the LuxSE Securities Official List (SOL).

The LuxSE has, as of 31 January 2022, admitted the first financial instruments registered on a public distributed ledger technology (DLT) on LuxSE SOL.

SOL is a section of LuxSE’s Official List, which is governed by the Rulebook of the LuxSE, as amended, the Luxembourg law of 13 July 2007 on markets in financial instruments, as amended, and the Grand Ducal regulation of 30 May 2018 on the protection of financial instruments and client funds, applicable product governance requirements and rules governing the granting or collection of fees, commissions or any other monetary or non-monetary benefits.

Similar to other financial instruments admitted on SOL, security tokens registered thereon cannot be admitted to trading on either of LuxSE’s two markets, namely the regulated Bourse de Luxembourg  market and the Euro MTF.

On this occasion, the LuxSE has published a set of new guidelines (the Guidelines) for the registration of certain DLT financial instruments (the DLT Financial Instruments) on the SOL, in order to clarify the eligibility criteria and to guide issuers of security tokens through the relevant admission process.

The registration of DLT Financial Instruments on the LuxSE SOL is part of LuxSE’s wider digital agenda; it is aimed at providing enhanced visibility to security tokens and their issuers, as well as facilitating the dissemination of indicative prices and securities data in respect thereof.

The DLT Financial Instruments that may be considered for registration on the LuxSE SOL need to fulfil certain minimum requirements, as follows:

• debt instruments offered exclusively to Qualified Investors[1] or issued in a denomination per unit of at least €100,000

• issuers having previously issued securities in capital markets or applicants having a proven track record in capital market transactions; and

• pricing in fiat currency

The Guidelines further set out what additional information has to be contained in the Information Notice[2], when issuers apply to register DLT Financial Instruments on the LuxSE SOL, most notably information on the DLT used, the processes carried out in an automated way within the DLT environment, the existence of a contingency plan in case of failure in the DLT (together with a responsibility and liability statement), confirmation that the DLT Financial Instruments qualify as Securities[3] under their governing law, description of the parties involved, description of the risk factors and the settlement process, as well as environmental considerations on the DLT used.

The Guidelines can be found here.

The LuxSE’s communication can be found here.

Harneys Luxembourg has vast experience in listing securities on the LuxSE, with a focus on the Euro MTF market. Following their LuxSE listing, we also provide advice to issuers concerning ongoing regulatory obligations, matters concerning the Market Abuse Regulation, as well as any LuxSE aspects of corporate and/or financing transactions. We have particular experience and expertise in dealing with dual-listed issuers.

[1] As such term is defined in the Regulation (EU) 2017/1129 of the European Parliament and of the Council of 14 June 2017 on the prospectus to be published when securities are offered to the public or admitted to trading on a regulated market.

[2] As such term is defined in the Rulebook of the LuxSE, as amended.

[3] Idem.