The London Stock Exchange is taking a significant step towards bringing tokenisation into mainstream equity market infrastructure, with plans for a UK tokenised equity structure and a partnership with Payward that could eventually connect blockchain-based distribution with regulated public markets.
The initiative is intended to explore a model that broadens access to UK equities while retaining the shareholder rights, investor protections and governance standards associated with conventional public markets. LSE is examining how LSEG’s Digital Securities Depository (DSD) could provide the underlying settlement and asset-servicing infrastructure, subject to regulatory approval.
At the same time, LSE is partnering with Payward, the parent company of crypto exchange Kraken and developer of the xStocks framework, to examine how wallet-based access and digital-native infrastructure could connect with LSEG’s regulated ecosystem.
The partnership brings together two strands of the developing tokenised-equity market: regulated exchange infrastructure and the ability to distribute and move assets across blockchain networks.
Building the Tokenised Stack
The announcement fits into a much broader infrastructure programme underway at LSEG. In July, LSE announced LSE 24, a separate 24/5 trading venue designed for digital, algorithmic and agentic trading. Client testing is expected by the end of this year, with exchange-traded products scheduled as the first asset class in the first half of 2027, subject to regulatory approval.
LSEG is also developing DSD as interoperable settlement and servicing infrastructure for digital securities. Announced in February, the platform is intended to connect traditional and digital markets, support multiple blockchains and eventually cover assets including equities, fixed income and private markets.
Alongside this sits Digital Settlement House (DiSH), LSEG’s infrastructure for programmatic, instantaneous settlement between payment networks using commercial bank money. DiSH is designed to support both traditional and on-chain transactions and provide 24/7 payment-versus-payment and delivery-versus-payment settlement.
Taken together, LSE 24, DSD and DiSH point towards an increasingly integrated architecture spanning trading, securities settlement and the cash leg of transactions.
Connecting Traditional and On-Chain Markets
The Payward partnership adds another element. Subject to regulatory approval, LSE intends to list xStocks (tokenised representations of publicly traded shares, backed 1:1 by the underlying securities) and begin trading them on LSE 24 in 2027. Payward plans to make the 100 largest London-listed equities available as xStocks in the coming weeks. The companies will also explore issuer-backed structures that could preserve the rights attached to conventional shares while allowing assets to move across digital networks.
“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 LSE plc and Head of Digital and Securities Markets at LSEG.
The question of what investors actually own when they hold a tokenised equity is already attracting regulatory attention. The US Securities and Exchange Commission, for example, has explicitly distinguished between securities tokenised by or on behalf of their issuer and third-party tokenised products, which can give holders different rights.
UK regulators are meanwhile laying the groundwork for broader institutional adoption. The Bank of England and Financial Conduct Authority set out a shared approach to wholesale-market tokenisation in May, identifying regulatory certainty, settlement assets and infrastructure as priorities.
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