[ESMA12-2121844265-3182 ] Report on the DLT Pilot Regime – Study on the extraction of transaction data

ESMA and PwC published two reports on the DLTR concerning the registration of financial instrument transactions on various DLTs and on the extraction of transaction data from selected DLTs: Corda, Ethereum, and Hyperledger Fabric.
As a reminder, the DLTR – implemented in June 2022 – is designed to foster innovation in European capital markets by permitting eligible firms to run DLT-based market infrastructures for trading and settlement, subject to certain conditions and potential exemptions from some MiFIR regulations.
The first report investigates the use of DLT or blockchain technology in financial transactions when exemptions are granted under MiFIR’s Article 26. Transaction reporting is crucial for regulators to monitor market movements and maintain stability. The report analyzes these DLTs and finds that they do not fully meet MiFIR regulatory requirements without additional reporting fields, particularly those identifying DLT transactions and trading parties. The report recommends extending the MiFIR reporting schema to ensure compliance.
The second report concentrates on the extraction of transaction data from the same DLTs. It evaluates three approaches – file-based, API-based, and native access to the DLT network – in terms of costs and benefits. The report provides recommendations on including regulatory information in market surveillance and on-chain analysis tools. Specific details about Corda are discussed, emphasizing its Notary Service, Uniqueness Services, and other key components. The report concludes that the file-based approach is the most cost-effective for data extraction, along with extending the MiFIR schema with DLT-specific transaction fields.