The London Stock Exchange (LSE) is reportedly planning to develop a digital markets enterprise. The move aligns with its broader strategy to become the first major exchange offering comprehensive trading of traditional financial assets on blockchain technology.
One of the world’s oldest stock exchanges which can trace its history back more than 300 years, is “definitely not building anything around cryptoassets.” The focus is rather on blockchain technology to improve the efficiency of buying, selling, and holding traditional assets.
LSE’s Blockchain-Powered Trading Venue
According to Murray Roos, who serves as the head of capital markets at the LSE Group, the company has dedicated approximately a year to investigating the potential of a blockchain-powered trading venue. The firm has now reached an “inflection point” and opted to advance these plans.
LSE has roped in Julia Hoggett, the head of one of the units within the broader London Stock Exchange group. to lead the venture.
While speaking to the Financial Times, Roos emphasized that LSE had no intentions of developing anything related to crypto. Instead, the aim is to leverage the technology that serves as the foundation for Bitcoin and other assets to enhance the efficiency of traditional asset transactions, including buying, selling, and custody.
“The idea is to use digital technology to make a process that is slicker, smoother, cheaper and more transparent and to have it regulated.”
Roos explained that if their plans materialize, LSEG would become the first large global stock exchange to offer an “end-to-end” blockchain-powered ecosystem to investors.
“The ultimate goal is a global platform that allows participants in all jurisdictions to be able to interact with people in other jurisdictions completely abiding by rules, laws, and regulations, potentially multiple jurisdictions simultaneously, which is something that hasn’t been possible in an analogue world.”
Besides, the latest development comes months after the London Stock Exchange Group tapped Global Futures Options to start offering the country’s first regulated trading clearing in bitcoin index futures and options derivatives.
LSEG’s decision aligns with the current trend among major financial institutions, who are increasingly highlighting the blockchain’s potential to simplify the issuance and trading of financial assets, and much of the concept revolves around tokenization which is the creation of digital versions of stocks or bonds, and even gold and US Treasury notes, allowing for ownership tracking via blockchain.
Tokenization of real-world assets (RWA), for one, has gained tremendous traction in recent years, attracting both users as well as large institutional players. A recent report by Binance Research suggested that the tokenized treasury market is worth over $600 million.