London Stock Exchange exploring blockchain-powered digital market

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One of the world’s largest stock exchanges is building a blockchain-powered digital markets platform. The London Stock Exchange Group (LSEG) (NASDAQ: LDNXF) says that blockchain integration can make trading traditional assets smoother and more transparent.

LSEG, which owns the $3.3 trillion London Stock Exchange, has been studying the feasibility of a blockchain-powered trading venue for over a year, and according to the company’s head of markets, Murray Roos, it’s ready to take the next step.

In an interview with the Financial Times, Roos noted that the exchange group believes blockchain can transform the equities market. It can greatly improve the tedious, opaque, and costly process of buying and selling traditional assets through tokenization, he added.

“The idea is to use digital technology to make a process that is slicker, smoother, cheaper and more transparent… and to have it regulated,” he told FT.

LSEG will only tap blockchain technology and won’t be diving into ‘crypto’ assets, Roos clarified.

This one seems to be meant for #BSV and is therefore an interesting test of the business development abilities of our ecosystem. Winning LSE would win them all. https://t.co/vkMFP5Qrw1 pic.twitter.com/vMvbCNEDL0

— Rob (@Rob_GCC) September 4, 2023

The initiative would make the LSEG the first major global stock exchange with an end-to-end blockchain platform for asset trading. While many other exchanges have explored the technology, their solutions only cover a small part of the assets’ lifecycle.

Intercontinental Exchange (ICE) (NASDAQ: ICE), the parent company of the NYSE, is one of the exchange groups exploring blockchain. Last year, it acquired a majority stake in tZero, a blockchain platform developed by Overstock, in a move it said would usher in the era of blockchain-powered trading.

Some, like the Australian Securities Exchange (ASX), have abandoned their blockchain projects after exploring the technology for years. ASX had invested massive resources in the project: at one point, a third of its employees were working on the project. Its failure came down to a lack of cohesion with its technology partner and a radical approach to its implementation, Accenture said earlier this year.

Despite the hiccups of its peers, LSEG believes blockchain can impact the trading of traditional assets. The technology can enable investors to trade across jurisdictions and asset classes seamlessly, Ross told the British newspaper.

“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,” Roos stated.

Watch: Blockchain for banking and finance