LSEG embracing bitcoin technology to 'open up new opportunities for trading'
The centuries-old London Stock Exchange Group (LSEG) is embracing burgeoning bitcoin technology in the hope of scrapping outdated paper trading certificates for small and medium-sized businesses.
Borsa Italiana - which is part of the LSEG - has partnered with IBM to build a "blockchain" solution that will record all shareholder transactions and shareholding information for unlisted companies in Europe in a central, digital ledger, in hopes of replacing paper certificates.
"With a more digitised, streamlined and transparent process enabled by the blockchain solution, various parties - including issuers, regulators and investors - will have increased insight into company information," according to the LSEG, which said the programme is currently being tested by a small group of partners and clients.
Blockchain technology was originally developed as a hub to track transactions in crypto-currencies including bitcoin, but has since gained traction among mainstream banks and financial institutions.
It is widely seen as an opportunity to strip costs, serving as a central ledger to track and verify transactions.
The move is also expected to "open up new opportunities for trading and investment" for private small and medium-sized enterprises (SMEs) that otherwise lack access to public stock exchange networks or formal credit structures, the LSEG said.
"With this solution, SMEs in Europe can better access credit and link into a broader and more mature investor ecosystem, enabling them to set up new trading networks and obtain funding by sharing financial data in a security-rich and transparent public arena," it explained.
The technology will be built on a blockchain framework that will restrict sensitive securities data to authorised users, while using high levels of encryption to secure the information.
"LSEG is testing the use of blockchain technology in a financial business network where data segregation and confidentiality is vital," LSEG chief operating and information officer Chris Corrado said.
"By working with IBM, a pioneer in building enterprise-class blockchain solutions, we are committed to building, testing and scaling our capabilities in emerging technologies over time."