LSEG Plans Digital Securities Depository to Link TradFi, DeFi

LSEG has drawn up plans to launch a market infrastructure solution for institutional market participants that will connect traditional and digital asset markets, facilitating seamless interaction between existing and emerging settlement platforms.

The company says it is preparing for a future where “most bonds issued and available on exchanges – and eventually most securities – are tokenised, enabling market participants to benefit from greater transparency and improved efficiency.”

LSEG Digital Securities Depository (DSD) will support multiple chains and is slated to launch later this year, subject to regulatory approval.  LSEG already operates a DLT-based Digital Markets Infrastructure (DMI) that enables tokenisation and the broader distribution of funds. The new platform will allow for greater collateral management efficiencies and facilitate access to liquidity for a broad range of assets, including fixed income, equities, and private markets.  

LSEG is intent on forming a strategic partner group to ensure market feedback is incorporated into the design, build, and go-to-market process. Participants will be announced “soon,” the company says, noting that it aims to unlock scale and enable issuance, settlement and trading in both digitally native and digital representation of traditional securities. 

Ryan Hayward, head of digital assets, Barclays says LSEG’s DSD is a positive step in the development and adoption of digital assets across UK markets, while Rob Hale, co-head of global markets at Lloyds welcomes LSEG’s commitment to building next generation digital market infrastructure. NatWest Markets, Standard Chartered and State Street have also provided encouragement for the project, signalling strong momentum from key stakeholders in traditional markets, LSEG believes.