London Stock Exchange Becomes First Bourse to Launch Blockchain Platform For Private Funds
The London Stock Exchange Group (LSEG) has become the first bourse to launch a blockchain platform for private funds, with initial transactions live.
Built on Microsoft Azure, the Digital Markets Infrastructure (DMI) platform covers the full fund lifecycle, from issuance and tokenization to settlement and servicing, the LSE said in an announcement.
The platform’s debut demonstrates “the appetite for an end-to-end, interoperable, regulated financial markets DLT infrastructure,” said Dr. Darko Hajdukovic, LSEG’s head of digital markets infrastructure.
The LSEG added that the DMI platform aligns with the exchange’s goal to be the “first global exchange group to support customers across the full continuum.”
Private Funds The First To Launch On The LSEG Blockchain Platform
The first asset class to be launched on the LSEG’s blockchain platform were private funds, with plans to add more asset classes going forward.
Capital management firm MembersCap and Archax were the first clients that were onboarded onto the platform, according to the announcement.
MembersCap conducted the platform’s debut transaction to raise funds for its tokenized MCM Fund 1, while Archax acted as a nominee.
According to LSEG’s head of digital markets infrastructure Dr Darko Hajdukovic, the onboarding of those two firms and the first transaction are major milestones that demonstrate “the appetite for an end-to-end, interoperable, regulated financial markets DLT infrastructure.”
Following the onboarding of those two firms, EJF Capital will soon offer a number of its funds on the LSEG’s blockchain platform as well, the announcement added.
During this initial phase, all of the funds on the DMI will show up inside Workspace, which is a tool that investors already use on a daily basis. That means that fund managers will be able to easily connect with a number of professional investors simultaneously.
Meanwhile, those investors will be able to find, study, and invest in new private market opportunities that were hidden and difficult to access prior to the DMI’s launch.
The LSEG also plans to make the DMI platform “interoperable with current market solutions in distributed ledger technology as well as traditional finance,” and will connect the blockchain platform to a range of the group’s existing products in addition to WorkSpace.
LSEG Has Explored Crypto And Blockchain Before
In 2023, the LSEG had reportedly started assessing distributed ledger technology for a year. It subsequently concluded that the technology had matured to the point where it could underpin a new type of exchange infrastructure.
The launch of the DMI platform is not the LSEG’s first move in the crypto/blockchain space. Over the years, the exchange has made several moves into digital assets through its indexing arm, the FTSE Russell.
The FTSE Russell has developed a suite of digital asset indices, which have provided institutional benchmarks for cryptos. These included large-cap, mid-cap, and small-cap baskets.
The FTSE also partnered with SonarX to bring on-chain metrics and fundamentals to its crypto indices to provide a more accurate representation of projects’ network activity and health.
FTSE Russell partners with SonarX (Source: X)
In May 2024, the LSEG also approved crypto exchange-traded products (ETPs/ETNs). Issuers such as WisdomTree, 21Shares, Invesco, and Global X subsequently launched Bitcoin and Ethereum ETNs on the exchange that same year.
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