London Stock Exchange Goes Live with Blockchain Platform for Private Funds

The new system, called Digital Markets Infrastructure (DMI), focuses on private funds and completed its first transaction within hours of going live.

This launch marks a turning point for traditional finance. While banks and exchanges have tested blockchain technology for years, LSEG became the first to deploy a working system that handles real money and real transactions.

Microsoft Powers the Technical Foundation

The DMI platform runs on Microsoft Azure cloud services. This partnership gives LSEG the computing power and security needed to handle large-scale financial transactions. Microsoft helped build the system to work with both blockchain networks and traditional banking systems.

Bill Borden from Microsoft’s financial services team said the collaboration aims to “reshape the future of global finance.” The platform can handle the complete lifecycle of digital assets – from creating them to settling trades after they’re bought and sold.

The system operates on a private blockchain network, meaning LSEG controls access and maintains security. This differs from public blockchains like Bitcoin or Ethereum, where anyone can participate.

First Transaction Sets the Stage

MembersCap, an investment firm from Bermuda, conducted the platform’s inaugural transaction. The company used DMI to raise money for its tokenized reinsurance fund called MCM Fund 1. Archax, a regulated crypto exchange based in London, helped facilitate the deal as a nominee for the Cardano Foundation.

This first transaction demonstrates how the platform works in practice. Instead of using traditional paperwork and manual processes, the entire fundraising happened through blockchain technology. This approach can reduce settlement times from days to minutes while cutting costs.

EJF Capital has also joined as an early user, with plans to offer several of its funds through the platform. More investment firms are expected to follow as the system proves its capabilities.

Private Markets Get Digital Makeover

Private funds have been stuck with outdated processes for decades. These investments typically involve complex paperwork, limited access for investors, and slow settlement times. LSEG’s platform addresses these problems by digitizing the entire process.

The new system connects with LSEG’s Workspace platform, allowing fund managers to showcase opportunities directly to professional investors. This creates transparency that didn’t exist before in private markets.

Darko Hajdukovic, who leads LSEG’s digital markets unit, called the launch a “significant milestone.” He noted strong demand for regulated blockchain infrastructure that works with both digital and traditional assets.

The platform currently serves only institutional and professional investors. Retail investors cannot access these tokenized funds, at least for now. LSEG also prohibits secondary trading of tokens, keeping tight control over the system.

Massive Market Opportunity Ahead

The timing of LSEG’s launch coincides with explosive growth in tokenized assets. Real-world asset tokenization has grown 380% over three years, reaching $24 billion in total value according to recent industry reports.

Standard Chartered projects this market will explode to $30 trillion by 2034. Major financial firms like BlackRock and Franklin Templeton have already launched tokenized funds worth billions of dollars.

The UK private fund market alone represents approximately £1.2 trillion in potential assets. If just 5% of these funds migrate to LSEG’s platform by 2028, it would put £60 billion worth of assets on blockchain technology. This shift could save the industry around £78 million annually in operating costs.

BlackRock CEO Larry Fink has repeatedly stated his belief that all financial assets will eventually become tokenized. Other major institutions appear to agree, with JPMorgan, Goldman Sachs, and numerous asset managers launching their own blockchain initiatives.

Competition Heats Up Globally

LSEG isn’t alone in this race. Nasdaq filed a proposal with U.S. regulators to allow tokenized stocks to trade alongside regular shares on the same platform. If approved, this system could launch as early as 2026.

Other exchanges worldwide are developing similar capabilities. The competition suggests that blockchain technology is moving from experimental phase to mainstream adoption across global financial markets.

Traditional clearing houses and settlement companies are also exploring blockchain applications. These firms handle the behind-the-scenes work of financial markets, and blockchain could make their operations much more efficient.

LSEG plans to expand DMI beyond private funds to other asset classes in the future. The company hasn’t specified which assets will come next, but the platform’s design supports various types of financial instruments.

The Bottom Line: Finance Goes Digital

LSEG’s blockchain platform represents more than just new technology – it signals a fundamental shift in how financial markets operate. By proving that blockchain can handle real transactions safely and efficiently, LSEG has opened the door for widespread adoption across the industry.

The success of this platform could accelerate the convergence of traditional finance and blockchain technology, making financial markets more efficient and accessible for institutional investors worldwide.