On 14 February 2019, the Luxembourg parliament has passed into law the draft bill of law no 7363 on the usage of distributed ledger technology (DLT) for the circulation of securities, thereby amending the modified law of 1 August 2001 on the circulation of securities by introducing a new article 18bis which reads as follows:
· The account holder may hold securities accounts and proceed with recording the securities in these securities accounts within or by means of one or more secured electronic recording mechanism (dispositif d’enregistrement électronique sécurisé), including through one or more distributed electronic networks or databases. Successive transfers recorded within a secured electronic recording mechanism are considered equivalent to wire-transfers between securities accounts. The holding of securities account within, or the recording of securities in securities account through, a secured electronic recording mechanism does not affect the fungible character of the securities.
· Neither the application of the present law, nor the location of the securities which are still held with the relevant securities holder, nor the validity or enforceability of collateral arrangements (sûretés ou garanties) granted in accordance with the modified law of 5 August 2005 on financial collateral contracts are affected by the holding of securities accounts within, or by the recording of the securities in securities accounts through, a secured electronic recording mechanism.
The Luxembourg parliament stresses its ambitions in facilitating the adoption of distributed ledger technologies in the context of circulation of securities and will proceed with further innovations in this area in Luxembourg.
The ABBL would like to take the opportunity to thank its members for the contribution to the elaboration of ABBL’s opinion on this law bill.
By Andrey Martovoy, FinTech Adviser and Gilles Walers, Legal Adviser – ABBL