The LSE is, of course, one of the largest traditional stock exchanges in the world with a history that dates back to 1571.
Just this past week, PrimaryBid was recognized by AltFi as the “Crowdfunding Platform of the Year.”
PrimaryBid is not your typical crowdfunding platform as it connects retail investors to new share issuance on the same terms as institutional investors. Typically, institutional investors get the first and best cut of any securities offering. PrimaryBid’s internet-based platform gives individual investors exclusive access to new share issues and issuers on the LSE can access a broader pool of investors to augment capital formation and trading liquidity. Part of the democratization of finance as technology seeks to level the playing field for the little guy.
Lipstick on a Pig?
But not everyone was convinced that the deal was really that good.
WeOwn CEO Sascha Ragtschaa sent over a comment on the LSE/PrimaryBid hookup saying it was simply too little, too late. To quote Ragtschaa:
“Levelling the playing field for retail and institutional investors is a step in the right direction, but it’s too little, too late in terms of engendering real change. Investing in new interface technology without addressing fundamental issues with the stock exchange model is really just putting lipstick on a pig. The London Stock Exchange is still utilising the same antiquated legacy environment, and the investment model is still reliant on intermediaries – PrimaryBid is just another neo broker – so it’s not actually widening access to IPOs. This partnership doesn’t address fundamental problems such as cost and risk.
“Rather than big players making attempts to appear innovative, we need a new model for the stock exchange – one focused on providing a fairer, balanced marketplace for all types of investor. And one that uses technology to cut out middlemen and create a better working model, rather than focussing on a shiny user experience.”
“Tokenisation and blockchain technology have shown real capacity to reduce counter-party risks and enable real-time settlement, both of which are tangible benefits to both listing companies and participating investors. This is where real change will come from. We need to look towards a blockchain-based exchange model that will address underlying efficiency gaps and major systemic risks within the equity space, providing the true innovation we need to give retail investors a better deal.”
WeOwn has developed an investment platform, run on a bespoke blockchain, that digitizes assets – to simplify capital raising in a cost effective process. WeOwn takes care of the complete fundraising lifecycle, from issuance to investor management.
WeOwn is not the only platform seeking to leverage the benefits of a distributed ledger to remove existing friction in the issuance-transfer-custody-management process of traditional securities. I have yet to meet someone who does not believe digital securities are the future.
That being said, LSE has dabbled a bit in the tokenization sector but it is not clear if they are planning a transition similar to what the Australian Stock Exchange has been working on. The ASX is on track to deliver the current decades old CHESS system with a blockchain-based replacement system by March-April of 2021.
Whether LSE’s partnership with PrimaryBid is too late or not, the digitization of securities is inevitable.