The London Stock Exchange (LSE) is preparing to launch a blockchain-based platform for tokenization, aimed at accelerating and simplifying operations with traditional financial assets in private markets.
The LSE is working on establishing a separate legal entity that will be responsible for operating the digital trading platform built on distributed ledger technology (DLT). According to Bloomberg, the platform will initially serve only private funds, but after regulatory approval, it’s expected to expand to other types of assets.
Sources report that the LSE has been working on the initiative for about a year. Murray Roos, Head of Capital Markets at the LSE, explained that the company waited until blockchain technology matured and investors were ready for such changes. In his view, blockchain can optimize capital-raising procedures in private markets, where deals are often burdened by lengthy settlements and low transparency. Tokenization is also expected to simplify investor access to private markets and lay the foundation for expanding the range of available assets in the future.
According to Bloomberg, the LSE already tested its blockchain infrastructure in a real-world deal. With the support of regulated digital asset exchange Archax, funds were raised into the tokenized MCM Fund 1 managed by MembersCap.
Regulatory approval for the platform is currently in progress. The company is in discussions with U.K. and international regulators, as well as with the U.K. government and Treasury.
In 2023, the LSE planned to begin trading traditional financial assets via a blockchain platform, but development of the solution was delayed.
