LSEG Partners With Kraken Owner to Bring Tokenised UK Shares to Market
London Stock Exchange Group's Push Into Tokenisation and Crypto Markets
By Samuel Indyk and Elizabeth Howcroft
LONDON/PARIS, Sept 1 (Reuters) - London Stock Exchange Group plans to launch tokenised UK shares to expand global access to London-listed companies, it said on Tuesday, and will partner with Payward, parent of crypto exchange Kraken, to explore new ways of trading equities.
The move is the latest step in LSEG's push into crypto. In February, it said it would build a blockchain-based settlement service.
LSEG's Tokenised Shares Initiative
LSEG said the new initiative would allow products linked to UK-listed shares to be represented as blockchain-based tokens, which could be sold to people who currently trade cryptocurrencies.
Investor Pressure and Market Performance
The exchange operator has been under pressure to improve performance from activist investor Elliott Management, which disclosed a stake in February. LSEG shares have risen 20% since Elliott made its investment public, but remain 28% below their February 2025 peak.
Efforts to Attract Retail Investors
Tuesday's announcement also reflects efforts by traditional exchanges to attract retail investors accustomed to round-the-clock trading. LSEG recently unveiled plans for LSE 24, a 24-hour trading venue due to launch in the first half of next year.
The Tokenisation Trend in Financial Markets
Potential Benefits and Regulatory Concerns
TOKENISATION TREND
Supporters of tokenisation say it could transform stock markets by enabling 24/7 trading and near-instant settlement, potentially boosting liquidity and lowering costs. But the World Federation of Exchanges last year urged regulators to crack down on tokenised stocks, warning they could create new investor risks and undermine market integrity.
Industry Perspectives
"Tokenisation has the potential to change how investors access, and how issuers use, financial markets, but it must develop in a way that preserves the trust, rights and role of regulated markets," said Julia Hoggett, CEO of London Stock Exchange and head of digital and securities markets at LSEG.
Future Plans and Industry Collaboration
As part of the collaboration with Payward, LSEG intends to list xStocks, tokenised versions of publicly traded shares, on LSE 24 in 2027, subject to regulatory approval.
Other Exchanges Entering the Tokenised Market
Global Partnerships and Expansion
Other exchanges are also seeking a foothold in crypto-related markets. Germany's Deutsche Boerse said in April it had bought a $200 million stake in Kraken — equivalent to a 1.5% fully diluted holding — as part of a partnership covering crypto assets, tokenised markets, derivatives, and institutional liquidity services.
Broker and Crypto Exchange Initiatives
Broker Robinhood has launched tokenised stocks in the European Union, while crypto exchange Coinbase is also expanding into the sector.
(Reporting by Yadarisa Shabong in Bengaluru and Samuel Indyk in London. Editing by Susan Fenton and Mark Potter)
