The London Stock Exchange Group (LSEG) is reportedly developing a blockchain-based digital platform for trading financial assets.
Murray Roos, the head of capital markets at the LSEG, stated in an interview with the Financial Times that the Group is now preparing to introduce this innovative offering after nearly a year of investigating the feasibility of blockchain-powered trading.
Roos explained that the LSEG was “not building anything around cryptoassets,” instead, it is focused on using the technology that underlies them to improve the efficiency of buying, selling, and holding traditional assets.
“The idea is to use digital technology to make a process that is slicker, smoother, cheaper, and more transparent… and to ensure it is underpinned by regulatory standards,” Roos told the Financial Times.
This development aligns with a broader trend of traditional companies exploring blockchain’s potential to optimize the management and trading of financial assets. One prominent application of this technology is asset tokenization.
In a report published in June 2023, the Bank for International Settlements (BIS) hailed the concept as a significant advancement in the monetary system after dematerialization and digitization. It predicted that regulated tokenization platforms overseen by central banks would play a crucial role in future monetary systems.
If successful, LSEG will become the first major stock exchange to host traditional financial instruments on blockchain technology. Notably, this isn’t LSEG’s initial foray into blockchain and tokenization.
In 2017, the exchange announced its intent to employ blockchain technology to digitize the issuance of securities for small and medium enterprises (SMEs) in Europe. The exchange also invested in Nivaura, a bond tokenization startup, in 2019.
Ross also revealed that LSEG is already in talks with regulations in the United Kingdom on the idea and that its CEO, Julia Hoggett, has been tapped to lead the initiative.
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