This week the Luxembourg Stock Exchange announced that starting from January 2022, LuxSE admits Security Tokens that qualify as financial instruments as defined in Article 4(1)(15) of MiFID II to be registered onto the Securities Official List (SOL). This registration is not an admission to trading on a regulated market or on an MTF/OTF. However, listing their Security Tokens on SOL could have certain incentives and benefits for issuers, such as:
- The public display may increase visibility of the Security Tokens and attract investors.
- The registration may also facilitate the dissemination of an indicative price and securities data, which will be displayed.
Issuers have to fulfil the following criteria to register Security Tokens on SOL:
- Only experienced issuers and applicants with a track record of capital market transactions can make use of this new service.
- At the outset, only financial instruments, and more specifically debt financial instruments issued as Security Tokens can be admitted on SOL.
- The Security Tokens must be priced in fiat currencies.
- Offers must be limited to qualified investors or issued in wholesale denominations of at least Euro 100,000, so that an exemption from the prospectus requirement under the Prospectus Regulation applies.
- Moreover, the issuer of Security Tokens must comply with both the SOL Rulebook as well as LuxSE's Guidelines for the Registration of DLT Financial Instruments.
This announcement is another important step in furtherance of forming secondary markets for Security Tokens. Although the trading of Security Tokens on regulated stock exchanges still faces major legal challenges, the continued momentum in this area gives confidence about the future of financial instruments and blockchain technology.
Information from LuxSE on this topic can be found here: www.bourse.lu/SecurityTokens
If you have regulatory questions or are seeking to list on SOL, we are happy to provide our expertise.