The London Stock Exchange has issued its first-ever shares in tokenised form on the platform. Equity in financial technology company 20|30 was issued using the blockchain technology.
It was reported that shares in 20|30, worth around £3m, were issued in token form on LSE’s Turquoise equity trading platform – a multilateral trading facility originally created by nine major investment banks in 2008. Its aim is to be faster and more competitive than other more established trading venues.
The share issue has been regulated by the Financial Conduct Authority through its FCA regulatory sandbox Cohort 4 programme. This sandbox group included 29 firms, all accepted to test innovative new products and services.
20|30 isn’t the only blockchain technology firm being tested by the FCA, but it’s the first to trade on one of the LSE’s open, regulated markets.
Luke Saunders, Head of Digital Advisory and CTO at leading blockchain advisory firm AmaZix, commented on the news: “It is very promising to see that blockchain-based shares for the Fintech company 20|30 have been accepted on the London Stock Exchange. While the tokenisation of assets is nothing new, it is significant that one of the financial sector’s most important players is now embracing blockchain technology. This mirrors actions from some of the biggest financial firms, such as JP Morgan, who have looked at blockchain technology and its potential with greater interest over the last year.
“The blockchain provides organisations with the ability for fast, decentralised transfers which are recorded in an immutable ledger. The transparency and security provided by this technology makes it an obvious choice for distributing shares and represents a viable evolution on modern trading.
“While this announcement breaks new ground for blockchain technology in a traditional financial institution, it is certainly not going to be the last time we see tokenised assets or shares on other regulated trading platforms.”
Blockchain technology has the potential to significantly reduce costs in the financial markets. Because the technology uses a decentralised process to verify trades, it eliminates the need for clearing houses to process transactions, making trades cheaper and more transparent. It’s already being tested by other exchanges such as the Australian Securities Exchange, as reported by CNR in May last year.