Proactive Investors - The London Stock Exchange Group PLC (LON:LSEG) is planning to use blockchain-based technology to trade equities and other traditional financial assets, according to a Financial Times report published on Monday.
Murray Roos, the head of capital markets at LSEG, told the FT that the capital markets and data-technology group has been exploring the prospects of a blockchain-enabled trading platform for about a year.
Roos said blockchain tech has reached an "inflection point" in its capabilities to achieve these plans, with Julia Hoggett, the head of the London Stock Exchange, tipped to lead the venture.
"The idea is to use digital technology to make a process that is slicker, smoother, cheaper, and more transparent... and to have it regulated," Roos said.
LSEG is contemplating the formation of a separate legal entity to launch the project in the coming year, pending regulatory approval.
Discussions are underway with various regulators and the UK government. Roos envisions a global platform that facilitates cross-border interactions, adhering to the respective jurisdictions' rules and regulations, a feat not achievable in an analogue environment.
“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,” Roos said.
Blockchains are closely associated with cryptocurrencies like bitcoin and ether, but the concept has been around since the 80s.
In essence, blockchain acts as a decentralised accounting ledger that tracks transactions without the need for a centralised body.
Bitcoin was the first successful implementation of blockchain technology, allowing the peer-to-peer exchange of wealth without any intermediaries or trusted authorities.
Public, permissionless blockchains like bitcoin are pseudonymous, meaning users’ identity remains secret. This fact has been blamed for the abundance of fraud and scams in the cryptocurrency markets.
However, private, permissive blockchains, presumably like the one being developed by LSEG, can be ringfenced for authorised, KYC-checked customers.