Report: London Stock Exchange Group Mulls Blockchain-Based Trading for Traditional Financial Assets

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Sujha Sundararajan

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Sujha Sundararajan

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September 4, 2023 07:14 EDT

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The London Stock Exchange Group (LSEG) is exploring the potential for using blockchain to offer extensive trading of traditional financial assets, a company executive told the Financial Times on Monday.

Per Murray Roos, head of capital markets at the LSEG, the company has reached an “inflection point,” after examining the potential for a blockchain-powered trading venue for nearly a year. It has finally decided to take the plans forward, 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.”

Further, Roos told the UK publication that Julia Hoggett, head of the London Stock Exchange would likely lead the project.

“Definitely Not Building Around Crypoassets”

The LSEG is more into exploring the blockchain technology that underpins cryptos such as Bitcoin (BTC), in improving the efficiency of buying, selling and holding traditional assets. But it is “definitely not building anything around cryptoassets,” Roos confirmed.

The exchange wanted to confirm that the public blockchain tech is “good enough” and investors were ready, before proceeding with the project.

If the plan kicks off, the LSEG would become the first large stock exchange globally, to offer a complete “end-to-end blockchain-powered” lifecycle of financial assets, from issuance to trading, reconciliation and settlement, Roos said.

The LSEG, one of the oldest global stock exchanges, is planning to use a separate entity for the blockchain-based markets venture. Furthermore, the exchange is already in talks with the government and Treasury in the UK, as well as regulators across jurisdictions, and plans to roll out the first market within the next year.

“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 added.

The move would ease the process of issuing and trading financial assets, which usually relies on manual processes that are “very difficult” and cumbersome. 

Also, LSEG is planning to expand the digital business to other assets, once the model proves its potential on private markets initially.