London Stock Exchange Group plans to launch tokenised UK shares to expand global access to London-listed shares, it said on Tuesday, and will partner with Payward, parent of crypto exchange Kraken, to explore new ways to trade on equity markets.
The move marks the latest push by the London Stock Exchange to embrace crypto assets, after announcing in February that it would build a blockchain-based settlement service.
LSEG said the new plans would enable UK-listed companies to be represented as blockchain-based tokens and trade round the clock, while maintaining the shareholder rights, protections and governance standards that underpin public markets.
Broker Robinhood has launched tokenised stocks in the EU while crypto exchange Coinbase is also making a push into the nascent sector.
LSEG recently announced plans to launch LSE 24, a round-the-clock trading venue, in the first half of next year.
As part of the collaboration with Payward, London Stock Exchange said it intends to list xStocks, tokenised representations of publicly traded shares, on LSE 24 in 2027, subject to regulatory approval.
Proponents of tokenisation say it could revolutionise stock markets by allowing shares to be traded 24/7 and settled instantly, boosting liquidity and reducing transaction costs.
But the World Federation of Exchanges last year called on securities regulators to clamp down on tokenised stocks, saying that they create new risks for investors and could harm market integrity.
"Tokenisation has the potential to change how investors access, and how issuers use, financial markets, but it must develop in a way that preserves the trust, rights and role of regulated markets," said Julia Hoggett, CEO of London Stock Exchange and head of digital and securities markets at LSEG.
Reuters
