LSE Implementing Blockchain Technology: New Way of Trading

• Blockchain technology is a distributed database and decentralized form of storing data on a public ledger.
• London Stock Exchange (LSE) is planning to implement blockchain technology in the trading process.
• It will be beneficial concerning the effectiveness, cost efficiency, transactions, cross-border exchanges, etc.

LSE wants to change the trading process of traditional assets by implementing blockchain technology which can be a great project in the future. Blockchain has many advantages that are going to improve the trading process by including effectiveness. LSE may launch the project within a year. 

What is Blockchain Technology?

Blockchain is a computer file that is used for the storage of data or information. It has three major properties; which are distribution through duplication, cryptography, and openness. Distribution and openness say that the data is accessible to everyone, it gets duplicated from one computer to the other. 

Cryptography means ‘secret writing,’ the accessibility doesn’t allow everyone to edit the data or information. It needs some codes that should be used before editing the data. Blockchain is structured through blocks, and blocks can be of any size based on the type of blockchain. The ‘value’ of the block depends on the data of the blockchain for which it is used to record. For example, it is Bitcoin in the case of blockchain currencies, transactional data such as the exchange of services and goods between different parties, etc. 

Blockchain technology was first developed for the Bitcoin cryptocurrency which is decentralized and uses an encrypted blockchain model to track value exchange and ownership. But now, blockchain has many applications as well other than being a model system for cryptocurrencies. These applications include storing government records, tracking goods, smart contracts, tracking patient records, and verifying and tracking ownership of IPRs (Intellectual Property Rights). 

LSE Plans for the Blockchain-Powered Marketplace

The London Stock Exchange wants to transform the trading of traditional assets using blockchain with the main focus on auditability, efficiency, and transparency. The LSE will be the first global exchange to explore the potential of blockchain. According to the Head of Capital Markets at LSE, Murray Roos, the company has evaluated blockchain’s trading capabilities. Trading by using digital technology will create a more transparent, efficient, and cost-effective way of trading. 

Blockchain technology facilitates ‘tokenization’ by representing assets as tokens or crypto assets on the blockchain. The advantages of implementing blockchain technology in trading will be simplifying cross-border exchanges and near-instant transaction times. This will facilitate the development of a global platform where participants from different jurisdictions will be able to interact while sticking to respective rules and regulations. The blockchain advantages enhance operational efficiency and innovation. The proposed project could be launched in a year on regulatory approvals.  

Conclusion

The London Stock Exchange aims for a seamless trading process that encourages them to incorporate blockchain technology into the trading of digital assets such as crypto assets and tokens. The advantages of blockchain technology such as efficiency, transparency, audacity, cross-border transaction exchanges, and cost-effectiveness will improve the reach and working of trading processes nationwide as well as globally. The tokenization factor of blockchain is also very beneficial for trading which is seen by the London Stock Exchange.