First Steps Towards The Issuance Of Tokenised Bonds

• Jurisdiction: European Union,Portugal
• Law Firm: PLMJ
• Subject Matter: Finance and Banking, Corporate/Commercial Law, Debt Capital Markets, Financial Services, Securities
• Author: Mr Bruno Ferreira, André Abrantes and Tiago Azevedo Basílio
• Published date: 22 August 2023

Decree-Law 66/2023 of 8 August ("DL 66/2023") was published on 8 August, and transposed into Portuguese jurisdiction several EU regulations on financial services, including the Regulation (EU) 2022/858 of the European Parliament and of the Council of 30 May 2022 in relation to the pilot regime for market infrastructures based on distributed ledger technology¹("DLT Regime"

In order to implement the European provisions in respect of the use of distributed ledger technology ("DLT") to issue, trade and settle financial instruments issued through DLT, notably in the context of the issuance of debt instruments up to EUR 1 billion², DL 66/2023 has established a set of provisions aimed at harmonising and clarifying the applicable requirements set out in the Portuguese Securities Code³. These provisions address the technological challenges linked to the financial disintermediation triggered by the use of DLT.

Key points of DL 66/2023:

Form of representation of financial instruments issued through DLT

Unlike other European legislation, DL 66/2023 did not create a new form of representation for the digital representation of financial instruments issued through DLT. The Portuguese legislator chose to clarify that DLT representation is a form of book-entry representation. As a result, the issuance of debt instruments using DLT will be subject to the current registration rules for book-entry securitiess.

Registration systems

Among other innovations, DL 66/2023 adapted the provisions of the Portuguese Securities Code to the characteristics of DLT and, consequently, to the financial disintermediation that this technology entails. Therefore, it establishes an exception to the legal obligation of integration into a centralised system for financial instruments admitted to trading on a DLT...