In an interview with CNBC, the CEO of the London Stock Exchange (LSE), Nikhil Rathi, hinted that the blockchain could find some use in the 300 year old stock market. Rathi said that the exchange has noticed an “interesting array of different ideas” from rival venues, adding “we’ll see which ones gain market traction”.
“You can certainly see distributed ledger technology having an application in the issuance process,” he said. “I can see that technology being used in settlement too.”
The LSE was founded in 1571, making it one of the oldest exchanges in the world. By market capitalization, it is the world’s third-largest stock exchange.
Earlier this year, the exchange’s parent company, the London Stock Exchange Group (LSEG) recently bought a minority stake in a company called Nivaura, which claims to have issued the world’s first automated cryptocurrency denominated bond. Nivaura aims to automate the issuance of financial instruments such as bonds, equities and derivatives with the use of blockchain technology. The exchange has been testing the “issuance, admission and trading of equities with Nivaura” in a regulatory sandbox.
Exchanges Around The World Are Already Adopting Blockchain Technology
Other notable exchanges are already embracing the technology. Switzerland’s SIX exchange plans to launch its new SDX trading platform in the second half of this year. They will use blockchain technology to speed up trading. In April this year, the world’s largest stock exchange, Nasdaq, launched a new XRP index dubbed XRP Liquid Index (XRRLX) on its global data service.The Gibraltar Stock Exchange has become the world’s first stock exchange to offer the listing services of digital debt securities and digital funds.
Although financial firms distance themselves from cryptocurrency, many have said they see the benefit to the industry from blockchain technology.
Rathi said that, while he supported competition and innovation in the capital markets business, some “extreme manifestations” in the crypto space were cause for “a little bit of caution.”