London Stock Exchange ventures into blockchain for traditional asset trading

• The LSE Group has been exploring the potential of a blockchain-based trading venue for about a year.
• LSE aimed to leverage blockchain technology to improve the efficiency of holding, buying, and selling traditional financial assets.

The London Stock Exchange (LSE) Group was in the early stages of creating a blockchain-based platform for traditional financial assets. This development signifies a notable move towards incorporating blockchain technology into the world of traditional finance.

According to a report by the Financial Times, the LSE Group has been exploring the potential of a blockchain-based trading venue for about a year. Murray Roos, the head of capital markets at LSE Group, indicated that their efforts in investigating blockchain had reached a point where they decided to proceed with their plans.

Importantly, Roos clarified that the LSE Group’s focus was not on cryptocurrencies. Instead, they aim to leverage blockchain technology to improve the efficiency of holding, buying, and selling traditional financial assets.

Blockchain technology to enhance efficiency in traditional finance

The core idea was to use digital technology to create a process that is “slicker, smoother, cheaper, and more transparent” for traditional assets, Roos explained. He also emphasized that the platform would be subject to regulation.

Roos mentioned that the LSE Group waited until investors were ready, and the state of public blockchain technology was mature enough before moving forward with the project. The LSE Group aims to become the first major global stock exchange to offer an end-to-end blockchain-powered ecosystem to investors.

This move by the LSE Group aligns with a broader trend of traditional financial institutions exploring blockchain’s potential benefits. For instance, on 31 August, SWIFT, the bank messaging network, released a report outlining its strategy for connecting with various blockchain networks. This initiative aims to address the challenge of interoperability between different blockchain platforms.

Beyond the world of traditional finance, other industries are also embracing blockchain technology. On the same day, Lufthansa Airlines introduced

a non-fungible token (NFT) loyalty program on the Polygon [MATIC] network. This innovative program allows NFT holders to earn rewards such as access to airport lounges and flight upgrades.

As traditional financial institutions increasingly adopt blockchain solutions, it is likely that the technology will continue to play a significant role in reshaping the interaction with financial assets and services.