LSEG Fundraising Goes Digital with New Blockchain Platform

The London Stock Exchange Group (LSEG) has just taken a pretty big step into the future of finance. According to the Financial Times the group finished its first fundraising using a new blockchain based system. This LSEG fundraising shows how even the most traditional parts of the finance world are starting to use digital tools. The news was later shared by Cointelegraph via X (formally Twitter)

A First for the Exchange

The LSEG fundraising was carried out by a reinsurance asset manager called MembersCap. They used LSEG’s new digital platform to raise money. This platform runs fully on blockchain, and so it uses safe digital records instead of paper and any manual steps.

Unlike the older systems, it can deal with everything in one place. It issues tokens, trades them and also settles deals. All of this can happen pretty fast, with less delays and lower costs.

Why It Matters

Private fundraising is usually very slow and also costly, and some of the deals take over a month to settle. With blockchain though, that process can be just a few days. Faster settlement also makes it easier to join the market, especially for smaller investors who couldn’t have joined before.

This is not just about making a new cryptocurrency. LSEG is being clear that their goal is not to make a coin like Bitcoin. Instead, they want to make the way capital markets work better. By moving key steps to blockchain, they hope to make private markets more open, faster, and less costly.

Who Helped Build It

LSEG did not build the platform alone. Microsoft also played quite a big part in designing and also supporting the system. It already owns 4% of LSEG after an investment in 2022. They also added the new platform to Workspace which is LSEG’s investor tool. This lets the  users see if any of the fundraising deals are coming up and track them directly.

Darko Hajdukovic, who is the head of digital markets at LSEG, said that the aim is pretty simple: “We want capital markets to be more efficient and accessible.”

Benefits for Investors

So, what does this mean for the people who want to invest?

• Faster access. Instead of waiting for weeks, investors could invest in deals within days.
  
• Lower costs. With less middlemen and few paperwork, fees are not really as high.
  
• More clarity. Investors can follow the deals in real time, instead of just guessing what stage they are at.
  
• Wider reach. A smoother process could bring in more groups of investors.
  

Challenges to Overcome

Of course, there are still problems. The first of them being, regulation. Financial regulators will want to know how exactly the system works and if it has legal standards.

Adoption is the other main issue. Fund managers and investors should learn how to use the new system. Since technology is not always the most trustworthy, it will all tend to build slowly. The platform needs to prove that it is really safe and that it can be trusted well. 

What’s Next

For now, the main focus is on private funds. But LSEG plans on making the system grow to other types of assets too. That could maybe have both bonds or even equities later in the future. If things works smoothly, more companies might choose to raise money through this blockchain service.

Observers will be watching LSEG fundraising closely, at how much faster the deals actually become, and whether costs really fall. Also how investors react to all of this. The opinions of the regulators’ will also affect how fast it grows. But for now, the London Stock Exchange has shown that even the oldest of institutions can get into doing a completely new thing.