Find out more about the DSS, including the stages of the DSS for a sandbox entrant, digital securities in scope of the DSS and information on applying.
Background to the DSS
Developing technologies, such as distributed ledger technology (DLT), have the potential to make markets more efficient, transparent and resilient.
If implemented successfully, these technologies could lead to savings across markets and their users, by making existing processes faster and cheaper.
The Bank of England and the FCA (the regulators) are launching the DSS to give firms the opportunity to explore this potential safely. The initiative will help further our aim of strengthening the UK’s leading position as a global and vibrant financial centre by creating the right conditions for investment, innovation, and sustainable growth.
The DSS will be operational until December 2028 but can be extended by the Government. The window for applying to join the DSS is expected to close around March 2027, so that the regulators and firms inside the DSS can prepare for a transition to a possible new permanent regime, provided the new technologies are implemented successfully.
Stages of the DSS for a sandbox entrant
The DSS is divided into a series of gates for sandbox entrants to move through, providing a path to progress from one stage to the next. The level of permitted activity increases with each stage.
| Stage | Purpose | Legal designation |
|---|---|---|
| Initial application | We identify firms eligible to join the DSS. | None |
| Gate 1 | ||
| Testing | Testing stage and engagement with regulators to operate a trading venue or to be a Digital Securities Depository (DSD). | Sandbox entrant |
| Gate 2 | ||
| Go live | Firms carry out live business under initial limits. | DSD/authorised operator of a trading venue |
| Gate 3 | ||
| Scaling | Firms grow the business with a path to full authorisation for DSDs. | DSD/authorised operator of a trading venue |
| Gate 4 | ||
| Possible new permanent regime | Firms gain full authorisation to operate outside the DSS for DSDs. | To be decided/new category of Financial Market Infrastructure (FMI) |
Digital securities in scope of the DSS
Activities taking place in the DSS after Gate 2 will be live. This will involve issuing, trading and settling real digital securities.
The aim of the DSS is that these securities should be capable of being used in broadly the same way as traditional securities. For example, firms should be able to use the securities issued in repurchase agreements or write derivative contracts based on securities in the DSS as they normally would any other security.
The following financial instruments are examples of what could be issued and traded in the DSS:
- equities
- corporate and government bonds
- money market instruments such as commercial paper and certificates of deposits
- units in collective investment undertakings (fund units)
- emissions allowances
Who is eligible to apply
The DSS is open to firms of all sizes and at all stages of development as long as they are legally established in the UK.
This could be an existing financial institution that is already authorised or recognised under current regulation or a new entrant to the market.
Apply to become a DSS entrant
Before submitting an initial application, you should read the Guidance on the operation of the DSS. You may also wish to read the Policy Statement which sets out the regulators’ final policy approach and their response to industry feedback.
Completing your application
If you want to join the sandbox, you’ll need to complete our online application process.
To maximise your chances of making a successful application, make sure you read our supporting notes before submitting your form.
Applicant supporting notes (PDF)
You won't be able to save and reopen the application form once you’ve started. We recommend that you download a copy of the form to draft answers offline. There’s an option to download a blank copy on the front page of the application form. Once complete and ready for submission, your answers can then be pasted into the application form online.
After you submit your application
Once submitted, you’ll get an email confirming that your application form has been sent to both the Bank and the FCA. This will be the case even if you apply only to operate a standalone trading venue or DSD.
You may be contacted by either or both regulators separately for more information. Unless you're told otherwise, the information you provide in response to any follow up questions from either regulator will be shared with the other regulator.
The Bank and the FCA have entered into a new memorandum of understanding which describes how they intend to co-operate and engage in dual regulation of the DSS and sandbox entrants.
More information on the DSS
For more information on the DSS, please refer to the dashboard on the Bank’s website.
For firms that are live in the DSS, you’ll be able to access:
- Sandbox Approval Notices (SANs)
- limit utilisation
- DSS Rules
- Gate 2 information: the Bank’s application process for DSDs and questionnaire
Learn more about our authorisation process.
Find out how our pre-application support service (PASS) can provide extra support before you apply to us for authorisation.
