DLT and blockchain in Malta

Simon Zammit, Chief Executive Officer of the Malta Stock Exchange, was recently a panellist at the WFE’s Technology Conference 2019 held in Umeå Sweden. The panel was moderated by Dr. Urs Rüegsegger, Chairman of The WFE and was also composed of Artem Korenyuk from the DTCC and Rupertus Rothenhäuser from the SIX Digital Exchange. The panellists presented information about the market structure they are building around crypto-currencies, crypto-assets, and tokens. They also discussed their own experiences in applying new technologies within their projects.

On the outcomes from the panel discussion and the lessons learnt from the WFE Technology Conference, Simon commented: “It was a great opportunity to hear how other players in the capital market are approaching these new technologies. The panel discussion, as well as the presentations throughout the conference, gave us the rare opportunity to validate our approach by observing the similarities in which we and other exchanges are building our respective models."

Distributed Ledger Technology (DLT), blockchain and digital assets have become topical issues in Malta. The innovative and rapid developments in the legislative and regulatory environment that have been achieved in the past year have made the Maltese jurisdiction one of the global leaders in drafting laws that regulate digital financial assets. The Malta Stock Exchange itself has taken part in this innovation and established MSX as the digital asset and FinTech arm of the exchange. In 2018, the exchange announced collaborations between MSX and a number of major companies operating crypto-platforms in order to identify opportunities within the DLT space. With the proposed launch of a digital exchange for security tokens, these collaborations will soon materialise into regulated and licensed services. MSX, together with its partners, is engaging fully and on an ongoing basis with the competent authorities to ensure full compliance with existing regulation, and also to ensure that stability is achieved through the implementation of robust technology that uses world class functionality and information security management techniques.

During the panel discussion, Simon explained how the Malta Stock Exchange brought its competences, experience and know-how in managing and operating a regulated market infrastructure to these partnerships, while the chosen partners brought their technology and know-how in operating crypto-platforms and security tokenisation. Simon explained how, through these partnerships, the Malta Stock Exchange and MSX will be strengthening their own internal competencies through the exposure and active participation in the DLT environment while still being able to take advantage of the speed to market that such collaborations will provide.

It is expected that regulated capital market services based on DLT will start to be rolled out during 2020, focusing initially on applying DLT to gain efficiencies in the payment side of the securities value chain. In fact achieving instantaneous settlement will be the initial objective. The Malta Stock Exchange expects that the full advantages from these new technologies will be achieved incrementally over the coming years, and expects to be able to apply DLT within other areas of the capital market infrastructure as opportunities arise.