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London Stock Exchange Plans Blockchain-Powered Marketplace for Traditional Assets

London Stock Exchange to transform traditional asset trading using blockchain, with a focus on efficiency, transparency, and auditability

Shashank Bhardwaj
Published: Sep 7, 2023 02:39:27 PM IST

London Stock Exchange Plans Blockchain-Powered Marketplace for Traditional AssetsImage: Shutterstock

The London Stock Exchange Group (LSE) is embarking on a groundbreaking journey to introduce blockchain technology to the world of traditional asset trading. This move positions LSE as the first major global exchange to explore blockchain's potential for revolutionising the trading of assets like stocks, bonds, and commodities.

Blockchain technology, renowned for powering cryptos like Bitcoin and Ethereum, will play a pivotal role in optimising the trading of traditional financial assets on the LSE platform. Murray Roos, Head of Capital Markets at LSE Group, revealed that the company has meticulously evaluated blockchain's trading capabilities for over a year, as per a Financial Times report. Julia Hoggett, the leader of the London Stock Exchange unit within the group, will spearhead this ambitious project, establishing a specialised business group to drive it forward.

LSE, on par with giants such as the New York Stock Exchange and Nasdaq, envisions employing digital technology to create a more efficient, transparent, and cost-effective trading process while maintaining rigorous regulation. Blockchain technology facilitates the "tokenisation" process, where assets are represented as crypto assets or tokens on the blockchain. This enables tracking of transactions on a tamper proof digital ledger, ensuring auditability.

LSE Group's decision to adopt blockchain for traditional asset trading is rooted in its aim to provide a seamless trading experience. Blockchain proponents highlight its ability to standardise global transactions, with identical tokens and near-instant transaction times, simplifying cross-border exchanges that would be complex and require heavy paperwork in traditional systems.

LSE Group collaborates with regulators in multiple jurisdictions, including the UK Treasury, to facilitate this global platform's development. This initiative aims to create a unified platform where participants from different jurisdictions can interact while adhering to respective rules and regulations.

The proposed project could be launched within a year, contingent on regulatory approvals. Initially, it will focus on private markets due to their complexity, with potential expansion to other asset classes in the future.

As blockchain technology continues to make inroads into traditional finance, LSE's foray into blockchain-powered traditional asset trading represents a significant milestone. It aligns with the broader industry trend of harnessing blockchain's advantages to enhance operational efficiency and innovation. The global financial landscape is poised for transformation as blockchain adoption gathers momentum.

Shashank is the founder of yMedia. He ventured into crypto in 2013 and is an ETH maximalist. Twitter: @bhardwajshash

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