Government progresses plans for share digitisation
The Government has set up a new technical working group to take forward plans for improving and digitising the system for holding UK listed company shares, as part of a wider initiative to make the UK's capital markets more competitive.
DEMAT's remit
The group, known as the Dematerialisation Market Action Taskforce (DEMAT), has been tasked with the following actions and deadlines.
- By summer 2026: Reporting back to the Government with a recommended go-live date (to fall before the end of 2027) and implementation plan for Step 1 in the digitisation process to be achieved, i.e. the replacement of paper based certificated share registers by digitised share registers. The plan should cover how the Taskforce will work with industry to implement and communicate the move to all stakeholders.
- By the end of this Parliament (2029): Getting the market ready for Step 3 of the digitisation process to begin, i.e. the transition into a fully intermediated system. This will involve the Taskforce working with market participants over the next few years to identify and implement the actions needed as part of Step 2, i.e. improvements to the intermediated system. These actions should include firms communicating and explaining any changes made in Step 2 to affected stakeholders, and the Taskforce flagging to the Government and/or the regulators any actions which they need to pursue. The Taskforce has also been asked to assess progress in implementing Step 2, in line with Government criteria, and to set out a recommended transition plan for Step 3, which should include a decision on the optimal method and timing for transitioning all remaining shares into the intermediated system, including whether or not a 'one-way street' and/or a 'sunset date' should be implemented.
Criteria for assessing readiness for Step 3
The Government's instructions for DEMAT include key principles which can be used to assess progress within Step 2. These are designed to ensure an orderly process while protecting the rights of shareholders. DEMAT should check that:
- Beneficial owners can exercise their rights effectively and efficiently through intermediaries, based on the “baseline service" recommended in the Digitisation Taskforce report.
- Beneficial owners can receive information promptly and transparently through intermediaries.
- Arrangements are in place for intermediaries to onboard remaining shareholders effectively and efficiently.
- Investors benefit from choice and transparency on the services that they wish to receive from intermediaries based on their different preferences.
- Relevant stakeholders are informed about the transition, how it affects them and what they need to do, and appropriate solutions are in place where the investor cannot be identified or contacted.
- The interests of vulnerable and older investors are considered and accounted for in the transition plan.
More information
The DEMAT's terms of reference are available here.
