The London Stock Exchange Group (LSEG) has announced plans to build a new on-chain settlement system for institutional investors, called the LSEG Digital Securities Depository. The service aims to connect traditional securities markets with blockchain networks, allowing large institutions to trade and settle tokenized bonds, equities, and private market assets using blockchain technology while maintaining compatibility with existing financial infrastructure.
The first phase of the system is planned for 2026, pending regulatory approval. The depository will work across multiple blockchain networks and is designed to interact with current settlement platforms used by banks and asset managers. It will focus on collateral management and improving liquidity access for fixed income securities, equities, and private market assets.
Daniel Maguire, group head of markets at LSEG, stated: "We look forward to welcoming new strategic partners as we build LSEG Digital Markets Infrastructure - a seamless ecosystem in which participants can move effortlessly between digital and traditional markets, connected across time zones and choice of payment options."
The announcement comes as LSEG faces pressure from activist hedge fund Elliott Management, which has built a significant stake in the company and is pushing for better financial performance. LSEG shares have fallen more than 35% over the past year, though they rose 0.9% following the announcement.
Major British banks and financial institutions have expressed support for the initiative, including Barclays, Lloyds, NatWest Markets, Standard Chartered, Brookfield, and State Street. LSEG will form a strategic partner group to gather market feedback during development.
This move expands LSEG's existing blockchain capabilities, which include a distributed ledger technology platform powered by Microsoft Azure for tokenizing and distributing private funds. The company aims to position itself competitively against other exchanges and infrastructure providers developing similar blockchain-based settlement systems in jurisdictions like Singapore and Switzerland.
