The Bank of England Financial Market Infrastructure (FMI) Rulebook

CCPs sit between buyers and sellers of financial contracts so that both parties hold a contract with the CCP rather than with each other. This ensures that the obligations of a trade can be fulfilled if one party fails so reducing counterparty credit risk.

CSDs keep ownership records of individual securities and facilitate the secure transfer of these securities between people or entities.

Payment systems are entities that allow funds to be transferred between, for example, businesses and individuals, and from business-to-business and individual-to-individual. They are used for many day to day transactions.

Stablecoins are a form of digital asset that can be used to make payments. They tend to be less volatile than cryptoassets. That is because their value is tied to other, stable, assets. Further information about stablecoins and how they work.

FMIs and other regulated firms increasingly rely upon certain third party service providers to deliver their services, some of which are critical to UK financial stability. Failure of or disruption to these third-parties’ services could act as a single-point-of-failure impacting multiple firms and FMIs simultaneously and, in some cases, UK financial stability.

The DSS is a regulated live environment that has been created to explore how developing technologies could be used by firms to undertake the activities of notary, maintenance and settlement for financial securities either alone, or together with the operation of a trading venue. For example, the DSS will facilitate the issuance, trading and settlement of digital securities in the UK on distributed, programmable ledgers. These activities will need to comply with regulation by the FCA and the Bank.