According to a report in the Financial Times, the London Stock Exchange Group (LSEG) is planning a blockchain-based exchange to target private markets. It will tokenize traditional or real world assets rather than cryptocurrencies and aims to support cross border digital asset trading. The project is still at an early stage.
However, the report claims LSE’s blockchain solution would be the first major stock exchange to launch end-to-end trading and settlement using the technology. That’s not entirely true as SIX went live with its SIX Digital Exchange (SDX) in 2021, including a regulated digital central securities depositary (CSD).
“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,” Murray Roos, head of capital markets at the LSE Group told the FT. The stock exchange has already started discussions with the UK Treasury and regulators in other jurisdictions.
He cited the difficulty of trading across borders if you have a buyer and seller of different nationalities, selling a stock based in a third jurisdiction.
AsiaNext, a Singapore joint venture between SIX and Japan’s SBI also has international trading in its sights, but started by targeting cryptocurrencies.
Several stock exchanges worldwide are progressing blockchain and tokenization initiatives, in some cases for end-to-end exchanges and in other cases for post trade. The Deutsche Borse’s CSD Clearstream launched D7, a DLT-based post trade solution. In a Ledger Insights opinion piece, Jens Hachmeister of Clearstream outlined the potential for DLT in capital markets. HKEX is another where blockchain is used post trade for specific scenarios. And the Tel Aviv Stock Exchange recently announced digital asset plans.
In Japan, JPX, the operated of the Tokyo Stock Exchange announced plans to tokenize stocks by 2025. It has already been involved in a tokenized green bond issuance. SBI launched the Osaka Digital Exchange, which will start to trade tokenized stocks soon.