Background and context
Financial Services Growth and Competitiveness Strategy UK Government, 15 July 2025
“…new vision for kickstarting growth in the financial services sector over the next ten years.”
“…ensure our markets support investment in UK businesses and enhance their competitiveness through driving forward digitalisation”
“Publishing and responding to the final report of the Digitisation Taskforce, which sets out a staged approach to removing paper share certificates and modernising the UK’s shareholding framework. The government has accepted the recommendations in the report, which will deliver a more coherent shareholding system and reduce costs for firms while ensuring that shareholders can exercise their rights effectively and efficiently.”
Recent history
Pre 2016 and Brexit:
We were preparing for EU dematerialisation required under Central Securities Depositories Regulation (CSDR)
2022:
The Chancellor launched the Digitisation Taskforce with the goal of digitising the entire UK shareholding framework
July 2023:
The Digitisation Taskforce released their Interim Report outlining proposals and seeking feedback from stakeholders
September 2023:
EQ provided feedback believing in a two-step approach, firstly to create a digital register that removes paper certificates and secondly to move to a fully dematerialised intermediated UK model
July 2025:
The Digitisation Taskforce released its Final Report and Final Recommendations, recommending a three-step approach in line with the EQ recommendations.
Timeline and recommendations
Step 1: Removal of paper share certificates and establishment of digitised registers. Recommended date no later than the end of 2027
- Physical share registers should be replaced by digitised share registers, and physical share certificates with entries on these digitised registers. There should be a single implementation date for this move, before the end of 2027.
- A Technical Group should be established to finalise the digitisation process.
- The Uncertificated Securities Regulations (“USRs”) should be amended as soon as possible such that shares of UK incorporated companies held on an overseas branch register can be held in dematerialised form.
- There should be better information provision as part of the move to digitised share registers.
Step 2: Preparing for a fully intermediated system. Recommended implementation by end of this parliament.
- The ability for companies to communicate digitally with their shareholders should be made easier
- Payments to shareholders should have to be made electronically
- A common communication language should be implemented for the intermediated securities chain
- Intermediaries should have to offer a baseline service to shareholders
- Other measures should be taken forward to enhance ultimate beneficial owners’ rights
- The government should consider if it might be possible for the sole purpose of this dematerialisation exercise that a waiver of KYC/AML checks be granted
- Steps should be taken to facilitate UK digitisation for Jersey, Guernsey and Isle of Man companies admitted to trading in London
- Steps should be taken to facilitate the digitisation of UK plcs with other international listings
Step 3: All shares transition into the intermediated securities chain. No recommended definitive timeline.
- Once improvements to the intermediated system are made under Step 2, the Technical Group should consider requiring that the digitised share registers become a “one way street”, with no new shares being issued onto them
- The Technical Group should consider whether a ‘sunset date’ should be set for digitised registers to end and the full move to the intermediated system to take place
- In scope companies should be given powers to rematerialize “untraceable” CSN participants’ holdings and cancel any evergreen elections of certificated holders for scrip dividends
- Issuers, registrars and intermediaries should ensure all stakeholders are made aware of the digitisation process and how it affects them
Industry Taskforce
DEMAT (Dematerialisation Market Action Taskforce): the Technical Group chaired by Mark Austin, established to work with industry stakeholders
Key industry stakeholders: UK listed companies, custodian, depositary, registrars, investor representative bodies
Objectives and Key Timelines
• Summer 2026: Chair of DEMAT to report on recommended ‘go-live’ date for Step 1, which should be before the end of 2027, with action plan to deliver.
• Identify and implement actions needed for Step 2, with the aim of the market being ready for Step 3 to begin by the end of this Parliament.
• Assess progress in implementing Step 2 and recommend a detailed plan for all shares to transition into the intermediated system in Step 3.
What’s next
Summer 2026: Chair of DEMAT to report on recommended ‘go-live’ date for Step 1, which should be before the end of 2027, with action plan to deliver.
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