London Stock Exchange Makes a Big Move! The first major global exchange embraces blockchain, unlocking the potential of $16 trillion in tokenized assets.

According to a Financial Times report, the London Stock Exchange (LSE), Europe's second-largest exchange, has developed a new digital market business plan to become the first major exchange to offer widespread trading of traditional financial assets using blockchain technology.

The London Stock Exchange Has Been Researching Blockchain for a Year and Decides to Take Action

The London Stock Exchange, headquartered in London, UK, is the second-largest stock exchange in Europe after Euronext Paris. Murray Roos, the Head of Capital Markets at the exchange, stated that the company has spent a year researching the potential of blockchain-driven trading venues and has decided to take action.

Roos said:

Our idea is to use digital technology to make processes smoother, cheaper, more transparent, and regulated.

He added that the London Stock Exchange Group has been waiting until public blockchain technology is "good enough" and investors are ready before moving forward.

Tokenization Will Be the Future Mainstream

Currently, many mainstream financial institutions are discussing blockchain to simplify the issuance and trading processes of financial assets, as these processes typically rely on cumbersome and frequent manual procedures. The most likely application at present is tokenization, creating digital forms of stocks or bonds that allow ownership to be tracked using blockchain technology.

Roos stated that if successful, the London Stock Exchange Group will be the first major global securities exchange to offer investors an "end-to-end" blockchain-driven ecosystem. Many other blockchain projects currently only cover part of the financial asset lifecycle, rather than providing a full-service from issuance to trading, reconciliation, and settlement.

Awaiting Approval from Multiple Regulatory Authorities

The London Stock Exchange Group hopes to establish a separate legal entity for its digital market business once approval from regulatory authorities is obtained. It is currently in negotiations with regulatory bodies in multiple jurisdictions, as well as the UK government and Treasury. The aim is to establish and start operating the first market within the next year.

The ultimate goal is to create a global platform that allows participants from all jurisdictions to interact with people from other jurisdictions.

He gave an example of a transaction involving a Swiss buyer, Japanese assets, and a US seller. This would be very difficult with older technology, but if the London Stock Exchange can gain support from multiple regulatory authorities, transactions can easily be completed in the digital world.

Roos believes that digital business may initially focus on private markets, as activities there are particularly cumbersome and opaque, before gradually expanding to other assets. He sees a high opportunity for digitizing a large number of asset classes. According to previous reports, it is estimated that the tokenized asset market will reach $16 trillion by 2030.