28th Regime Initiative for Dematerialised Debt Securities
Reference
The international central securities depositories (ICSDs), Clearstream and Euroclear, have proposed a market-led, optional EU-wide framework of a 28th regime to simplify and harmonise the issuance of dematerialised debt securities, including Eurobonds. This initiative supports the European Commission’s ambition to advance a stronger Savings & Investment Union (SIU).
Why a new framework?
The European single market’s full potential is currently hindered by legal fragmentation. Businesses seeking to issue or invest in securities across borders must navigate 27 different national legal systems. This comes along with high costs, delays in issuance and uncertainty. The current situation prevents issuers from easily issuing securities cross-border in dematerialised form, complicates matters for investors, and makes it more challenging for central securities depositories (CSDs) to provide efficient and scalable issuance services.
What is the proposal about?
The proposal offers a complementary solution designed as a “virtual 28th Member State”, building on the European Commission’s 28th regime concept, firstly introduced for corporate law (“EU Inc.”). It aims to overcome critical barriers by asking for a single, unified set of rules that issuers can voluntarily opt into, thereby streamlining the process for issuing dematerialised debt securities.
Key features
- Optionality: open to all issuers, regardless of their location and governing law
- Targeted scope: issuance of dematerialised debt securities
- Simple and straightforward issuance requirements: valid issuances by registration in an electronic record with a minimum level of key data
- Technology neutrality: issuance via traditional electronic book-entry systems or via innovative technology like DLT
- New record administrator role: responsibility within the issuance process, without introducing new licensing requirements
Unlocking potential: benefits for Europe, issuers, and investors
This framework is not merely a call for technical adjustments but a strategic market initiative to strengthen the SIU. It is projected to bring benefits across the entire value chain:
For the European Union
- Reducing legal and procedural fragmentation across Member States
- Supporting the EU Savings and Investment Union objectives
- Enhancing the global competitiveness of EU financial markets
- Promoting innovation through a technology-agnostic framework
- Ensuring all Member States can support dematerialised debt securities issuance
For issuers
- Reducing fragmentation by providing one unified EU issuance framework instead of 27 national regimes
- Lowering legal and operational costs by removing the need for multi-jurisdiction analysis
- Offering a clear and uniform issuance mechanism for dematerialised debt securities
- Enabling technology choice, supporting both traditional book-entry and DLT-based issuances
- Accelerating time-to-market for new issuances
For investors
- Providing clear ownership representation via a “single source of truth” at the top tier level
- Improving interoperability across different custody and holding models
- Reducing legal uncertainty in cross-border investments
- Expanding access to innovative digital and DLT-based instruments
- Strengthening infrastructure reliability through defined roles
Your voice matters
We invite all market participants to contribute their feedback and support this initiative. Your insights, discussions, and recommendations are crucial to shaping a regime that delivers tangible benefits along the value chain, while advancing the broader policy objectives of the SIU.
