London Stock Exchange completes first tokenised share sale

By Oliver Smith on Tuesday 16 April 2019

Savings and Investment

Startup 20|30 sold £3m in equity, with trades settled via blockchain technology.

London Stock Exchange completes first tokenised share sale
Image source: London Stock Exchange

This week, for the first time, a company sold equity on the London Stock Exchange Group’s Turquoise trading platform with trades being settled via blockchain technology.

The £3m in shares sold were in blockchain startup 20|30, which developed the technology to tokenise equities working with the LSEG.

Because 20|30 uses a decentralised process, the idea is that it could eliminate the need for clearing houses to process trades and could make transactions cheaper.

20|30 will use the funds raised to commercialise its technology into a product called TokenFactory.

The Telegraph reported that TokenFactory’s fees for future issues would be around 1%, a huge discount on the 7% which is usually charged on initial public offerings.

20|30’s share issue was regulated by the Financial Conduct Authority via its FCA regulatory sandbox Cohort 4 programme, of which 20|30 is a member.

“While this announcement breaks new ground for blockchain technology in a traditional financial institution, it is certainly not going to be the last time we see tokenised assets or shares on other regulated trading platforms,” said Luke Saunders, of blockchain advisor AmaZix.

“This mirrors actions from some of the biggest financial firms, such as JP Morgan, who have looked at blockchain technology and its potential with greater interest over the last year.”

This week’s sale was a very public demonstration of both 20|30 and the LSEG’s tech, as well as the Stock Exchange Group’s determination to be on the front foot when it comes to decentralised share sales.

Clearly the risk for the LSEG if security tokens gain momentum outside of the crypto community is that its centralised approach of handling trading might quickly be left behind.

20|30’s equity sale is a signal that the LSEG is determined to not let that happen.

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