ICMA responds to HMT’s and the UK DMO’s Announcement of Preliminary Market Engagement Exercise for the Digital Gilt Instrument (DIGIT) Pilot
11 April 2025 ICMA welcomes the opportunity to respond to His Majesty’s Treasury’s (HMTs) and the UK Debt Management Office’s (DMOs) announcement of a preliminary market engagement exercise for the Digital Gilt Instrument (DIGIT) Pilot.
ICMA’s response relates to select “market engagement questions” of non-commercial nature on the design of a Digital Gilt Instrument (DIGIT) and includes also broader considerations.
Key points:
- Investor demand for a DIGIT will be dependent on the characteristics of a DIGIT, individual investors’ strategies, cost-benefit considerations, as well as the ‘DLT readiness’ of investors’ custodians and sub-custodians, amongst other aspects.
- While the high-level expectation is that a DIGIT issuance will catalyse the market development as a whole and mark the starting point for further issuances, there is no clear consensus amongst different types of investors.
- As the first sovereign issuance by the UK, DIGIT has the potential to shape the evolution of the DLT-based Gilt market and the wider DLT-based bond ecosystem. DIGIT has an opportunity to address interoperability challenges and build on existing industry initiatives such as ICMA’s Bond Data Taxonomy (BDT), to avoid further fragmentation and bridge traditional and DLT-based debt securities.
- To mitigate the risk of market fragmentation, harmonisation of practices and collaboration on common standards will continue to be critical in order to foster the development of DLT-based bond markets as a reliable source of funding both for the public sector and the wider economy.
Given that a majority of questions are targeted at individual firms, we have encouraged constituents across ICMA’s global membership to respond individually to those questions.
