The London Stock Exchange (LSE) and Payward (Kraken’s parent company) announced a partnership today to begin tokenizing shares, with more digital asset innovation in the pipeline.
Indicating its interest in pursuing tokenization or digital securities, the LSE stated:
“The London Stock Exchange is assessing a UK tokenized equity structure designed to broaden access to capital markets whilst preserving the shareholder rights, protections and governance standards that underpin public markets today. The work will consider how LSEG’s Digital Securities Depository (LSEG DSD) could support settlement and asset servicing, subject to regulatory approval.”
Initial offerings will focus on UK shares in a tokenized wrapper issued via a Jersey Island entity. Going forward, UK regulators are expected to allow tokenized shares, and the LSE will be well positioned to move forward.
Richard Baker, Founder and CEO of Tokenovate and a frequent commentator on tokenization, once again said the success of digital securities hinges on post-trade infrastructure. He believes 24/7 trading will not work without robust post-trade features.
“The LSE’s plans for extended-hours trading and tokenised equities are the latest sign that established financial markets are preparing for a digital, always-on future. For the UK, it represents another opportunity to lead the next phase of financial innovation, building on the recent backing for tokenization by the FCA and Bank of England,” said Baker, who added that digital settlement is essential.
“Issuance and trading cannot evolve in isolation from the wider transaction lifecycle. For tokenisation to scale beyond individual initiatives, markets will also need common definitions, interoperable data standards and legal certainty spanning issuance, trading, settlement and asset servicing. That is how the underlying infrastructure can keep pace with innovation and support market-wide adoption.”
Tokenovate is aplatform that automates post-trade workflows, including settlement for derivatives and securities financing.