The company says the technology will enhance efficiency in buying, selling, and holding financial assets. It won’t, however, involve cryptocurrencies, according to Murray Roos, the head of capital markets at the LSE Group.

Roos told the Financial Times that the company has been researching blockchain technology for the past year, and says it will primarily be used to make the process for managing traditional assets “slicker, smoother, cheaper, and more transparent.”

If the LSE proceeds with the blockchain integration, it will become the first major global stock exchange to offer an end-to-end blockchain-powered ecosystem for investors. 

Many might associate blockchain with cryptocurrencies like Bitcoin and Ethereum, since it is the underlying technology behind the coins. However, the technology can be applied to traditional assets too. 

Aside from enhanced efficiency which comes from streamlining the settlement and clearance processes, blockchain technology also offers enhanced security. This is thanks to cryptographic techniques which make it difficult to alter or reverse transactions as well as making them resistant to tampering and fraud. 

The blockchain is also open 24/7, meaning trading and asset access could hypothetically happen even on holidays and weekends. The technology also lowers costs for traders by eliminating fees and commissions often included when doing regular transactions. 

Recommended

• UK Microchip Firm Arm Files IPO in US Nasdaq
• New Report Highlights Blockchain Could Add £4BN+ to Scottish GDP
• The Applications of Blockchain Technology Beyond Cryptocurrency

According to Roos, the LSE came to the decision to proceed with the blockchain integration after it assessed the readiness of investors and maturity of blockchain technology. They found the move aligns with a larger interest in the finance sector for blockchain’s potential.

Recently, the global bank messaging network SWIFT announced its vision for connecting blockchain networks based on a successful experiment. SWIFT collaborated with BNY Mellon, Citi, and Euroclear to test different types of transfers using simulated tokenized assets in an effort to overcome the challenges of interoperability faced by investors.