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Blockchain technology is primarily associated with cryptocurrencies, but its applications are seemingly limitless. The London Stock Exchange Group (LSEG) has decided to harness the potential of distributed ledger technology as it prepares to launch a new branch of its business focused on digital markets. The company claims it will be the first major exchange to offer trading in traditional financial instruments using blockchain technology.
This news was first reported by Financial timing, who spoke with Murray Roos, Head of Capital Markets at LSE Group. Based on the conversation, the company has been testing various blockchain trading solutions for more than a year. Julia Hoggett, Head of the London Stock Exchange, has been asked to lead this new project.
LSEG’s offering will not be linked to cryptocurrencies. Instead, it aims to be used
blockchains technology to enhance key features associated with trading traditional investment products.
“The idea is to use digital technology to make processes smoother, smoother, cheaper, and more transparent and regulated,” Roos said in a conversation with Financial timing.
While there are already several solutions on the market that utilize blockchain for trading, LSEG claims none of them do it comprehensively, only covering certain parts of the entire investment process. The London Stock Exchange aims to use distributed ledger technology to oversee the entire process, from issuance to trading and settlement.
This new business is not intended to compete with traditional exchanges but to complement their offerings. The company will form a separate legal entity to manage the business. If successful in obtaining all necessary regulatory approvals in the UK, the blockchain-powered trading solution will be available to investors next year.
How Blockchain Can Streamline Exchange Operations
According to Roos, the main goal of blockchain solutions is to provide access to financial instruments regardless of the jurisdiction in which the transacting parties are located.
He cited investors from various countries: buyers from Switzerland, sellers from America, and assets from Japan. In a traditional market, transactions between these parties would be complicated, but blockchain technology will make them fast, simple and secure.
Initially, this solution will be applied to the private market, thereby increasing access to available products and instruments. If the ‘experiment’ is successful, the service will be expanded to other markets.
The Future Lies in Tokenization
For LSEG, this is not their first venture into blockchain and tokenization. In 2019, the exchange operator invested in bond tokenization startup Nivaura. Two years earlier, the company announced it would use blockchain technology to digitize securities issuance for small and medium-sized enterprises (SMEs) in Europe.
So far, $800 million worth of assets have been ‘token’ on the European market. The launch of the LSEG product will certainly boost this value. Some traditional industry representatives believe tokenization is the future of financial markets and the next revolution that awaits them.
Among them is Larry Fink, Chief Executive of BlackRock, the world’s largest asset manager. BlackRock applied a few months ago to create its own ETF that tracks Bitcoin spot prices, sparking a subsequent wave of adoption and optimism in the digital asset’s charts.
Although the SEC (US regulator) blocked acceptance and delayed the final decision on this product, the industry is confident that a cryptocurrency ETF in the US will be released in just a matter of time.
Blockchain technology is primarily associated with cryptocurrencies, but its applications seem limitless. The London Stock Exchange Group (LSEG) has decided to tap into the potential of distributed ledger technology as they prepare to launch a new business branch focused on digital markets. The company claims it will be the first major exchange to offer trading in traditional financial instruments using blockchain technology.
This news was first reported by Financial timing, who spoke with Murray Roos, Head of Capital Markets at LSE Group. Based on the conversation, the company has been testing various blockchain trading solutions for over a year. Julia Hoggett, Head of the London Stock Exchange, has been asked to lead this new project.
The LSEG offer will not be tied to cryptocurrencies. Instead, it aims to be used
blockchain technology to enhance key features associated with trading traditional investment products.
“The idea is to use digital technology to make processes smoother, smoother, cheaper, and more transparent and regulated,” Roos said in a conversation with Financial times.
While there are already several solutions on the market that utilize blockchain for trading, LSEG claims none of them do it comprehensively, only covering certain parts of the entire investment process. The London Stock Exchange aims to use distributed ledger technology to oversee the entire process, from issuance to trading and settlement.
This new business is not intended to compete with traditional exchanges but to complement its offerings. The company will form a separate legal entity to manage the business. If successful in obtaining all necessary regulatory approvals in the UK, a blockchain powered trading solution will be available to investors next year.
How Blockchain Can Streamline Exchange Operations
According to Roos, the main goal of a blockchain solution is to provide access to financial instruments regardless of the jurisdiction in which the transacting parties are located.
He gave examples of investors from various countries: buyers from Switzerland, sellers from America, and assets from Japan. In traditional markets, transactions between these parties would be complicated, but blockchain technology will make them fast, simple, and secure.
Initially, this solution will be applied to the private market, thereby increasing access to available products and instruments. If the ‘experiment’ is successful, the service will be expanded to other markets.
The Future Lies in Tokenization
For LSEG, this is not their first foray into blockchain and tokenization. In 2019, exchange operators invested in bond tokenization startup Nivaura. Two years earlier, the company announced it would use blockchain technology to digitize the issuance of securities for small and medium enterprises (SMEs) in Europe.
So far, $800 million worth of assets have been ‘token’ on the European market. The launch of the LSEG product will certainly boost this value. Some traditional industry representatives believe tokenization is the future of financial markets and the next revolution that awaits them.
Among them is Larry Fink, Chief Executive of BlackRock, the world’s largest asset manager. BlackRock applied a few months ago to create its own ETF that tracks the spot price of Bitcoin, sparking the next wave of adoption and optimism in the digital asset chart.
Even though the SEC (US regulator) blocked acceptance and delayed the final decision of this product, the industry is confident that a cryptocurrency ETF in the US will be released in just a matter of time.
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