The London Stock Exchange is moving forward with plans to offer an end-to-end blockchain-powered ecosystem to investors.

Murray Roos, LSE Group’s head of capital markets, told the Financial Times that “The idea is to use digital technology to make a process that is slicker, smoother, cheaper and more transparent … and to have it regulated.”

The company has been looking into the potential for a blockchain-based trading venue for a year, and has now asked Julia Hoggett, head of the London Stock Exchange, to take the project forward.

Blockchain technology

Roos was keen to stress that LSEG was not looking to build anything around cryptoassets. The intention is to use blockchain technology to improve trade in traditional assets. The company feels that public technology is now good enough and investors are ready to consider a product.

He said there was no intention to compete with LSE’s traditional business. “What we are seeking to do is continue to do what London has always done and continue to innovate,” he said.

If these plans come to fruition, LSEG will be the first large global stock exchange to offer such a service. Other projects cover only part of the life cycle of financial assets. 

Blackrock’s move

Other traditional operators are also exploring the same territory. BlackRock’s CEO Larry Fink told shareholders earlier this year that asset class tokenization could drive efficiency for investors.

And the Bank for International Settlements, while remaining critical of crypto assets, has said tokenization of real-world assets is one way in which the traditional finance and crypto sectors could work together.  

Rob Mason, head of regulatory intelligence at Global Relay, said: “Blockchain technology has always been associated with crypto and so somewhat tainted by the same brush regarding frauds and scams. This is unfair and the technology of tokenisation of assets is likely to be the future of markets.

“There have been a few false starts seeking to leverage distributed ledger tech but this appears to be a more well-prepared offering.

“This may be a key development for LSEG as it seek to innovate in a number of areas to compete effectively against a tide of activity migrating away from the UK. Fitting this into existing structures with client, regulator and government in mind appears to have been a priority which gives the opportunity a positive springboard.”