DLT-MTF, DLT-SS and DLT-TSS

When you buy or sell a share, there are two distinct moments: first the market where the trade is matched (“I buy from you, you sell to me”), and then settlement, which is when the money and the security actually change hands. The EU created a “test bed” to do this with tokenised securities on blockchain, and defined three types of platform.

The DLT-MTF is like the market where orders are matched. The DLT-SS is the part that records and settles who holds each token. And the DLT-TSS is a hybrid platform that does both at once, something that the traditional world does not allow to be combined.

These are the three categories of market infrastructure provided for in the DLT Pilot Regime Regulation (EU) 2022/858 on a pilot regime for market infrastructures based on DLT, applicable since 23 March 2023:

DLT-MTF (DLT multilateral trading facility): operated by an investment firm or market operator authorised under MiFID II (Directive 2014/65/EU), with a specific permission under the pilot regime. DLT-SS (DLT settlement system): operated by a central securities depository authorised under CSDR (Regulation (EU) 909/2014). DLT-TSS (DLT trading and settlement system): a hybrid arrangement integrating trading and post-trading activities within a single entity.

The regime grants temporary exemptions, subject to conditions, from certain requirements of MiFID II and CSDR, in order to permit the trading and settlement of financial instruments in tokenised form. It applies only to financial instruments, not to crypto-assets subject to MiCA.