LSEG Unveils On-Chain Settlement Service for Tokenized Assets, Targets 2026 Launch

London Stock Exchange Group announced plans to build the LSEG Digital Securities Depository, an on-chain settlement system connecting traditional securities markets with multiple blockchain networks.

The platform will enable institutional investors to trade and settle tokenised bonds, equities and private market assets while maintaining interoperability with existing infrastructure. Backed by major UK banks and facing activist pressure from Elliott Management, LSEG’s move signals that blockchain-based settlement is no longer an experiment but a strategic priority for traditional finance. First deliverables are expected in 2026, pending regulatory approval.

LSEG Digital Securities Depository: What It Is and How It Works

The London Stock Exchange Group is not just testing blockchain—it is building production infrastructure. On February 12, 2026, the company disclosed its blueprint for the LSEG Digital Securities Depository, a settlement layer designed specifically for institutional investors who want to trade tokenised assets without abandoning the rails they have used for decades.

The depository will function as a bridge. On one side, it connects to the existing settlement platforms that banks and asset managers already rely on—systems that clear trillions of dollars daily. On the other side, it plugs into multiple public and permissioned blockchain networks, allowing tokenised bonds, equities and private fund shares to move on-chain.

This is not a replacement of traditional market infrastructure. It is an overlay. LSEG wants institutions to have the freedom to settle in digital form when it makes sense, but also to fall back on conventional plumbing when regulation or counterparty preference demands it. The system will support multiple payment options and operate across time zones, a nod to the global nature of modern capital markets.

Why LSEG Is Pushing Into Blockchain Now

The timing of Thursday’s announcement is no accident. LSEG has been quietly building blockchain capabilities since its 2022 partnership with Microsoft Azure, which produced a digital markets platform for private funds. That platform has already tokenised and distributed fund shares, proving the concept works.

But the push for a full on-chain depository comes as LSEG faces a very different kind of pressure—activist investor Elliott Management. The $76 billion hedge fund has built a significant stake in the company and is demanding better financial performance. LSEG shares have fallen more than 35% over the past year, weighed down by a weak UK listings market and a broader selloff in data and software stocks tied to AI disruption fears.

Against that backdrop, blockchain is not just technology—it is a growth story. By positioning itself as the first major exchange operator to offer institutional-grade on-chain settlement, LSEG can differentiate its services, attract new listings of digital-native securities, and justify a higher valuation multiple. The company trades at a noticeable discount to rivals like Moody’s and CME Group; bridging that gap is exactly what Elliott is pushing for.

Institutional Backing: Barclays, Lloyds, Standard Chartered Weigh In

LSEG is not building this alone. The company announced it will form a strategic partner group to incorporate market feedback, and the early signatories read like a who’s who of British finance.

Barclays called the depository “a positive step in the development and adoption of digital assets across UK markets.” Lloyds noted that its own work with tokenised deposits and gilts has already demonstrated real benefits—shorter settlement cycles, reduced operational risk, and more efficient capital deployment. NatWest Markets emphasised the importance of combining regulatory rigour with genuine interoperability.

Standard Chartered, which has its own digital asset custody and tokenisation ambitions, praised LSEG’s focus on institutional-grade infrastructure. Salman Ansari, the bank’s global head of capital markets, said elements like interoperability and operational resilience are “key to institutional adoption… needed to unlock scale for the next phase of digital fixed income market evolution.”

Even State Street, the US custodian giant, threw its weight behind the project. Angus Fletcher, its global head of digital solutions, argued that “as tokenisation continues to mature, interoperability between traditional and digital market infrastructure will be critical.”

What Are Tokenized Assets? A Quick Primer

For readers who have followed crypto but are less familiar with institutional finance, tokenised assets are simply traditional securities—bonds, equities, fund shares—that are represented as digital tokens on a blockchain.

This is not the same as cryptocurrencies like Bitcoin or Ether. Those are native digital assets that exist only on-chain. Tokenised assets, by contrast, have an off-chain legal anchor. A tokenised UK gilt, for example, represents a direct claim on an actual government bond held in custody by a regulated institution.

The benefits institutions see in tokenisation are threefold. First, settlement can happen almost instantly, rather than the T+2 or T+1 cycles that still dominate today. Second, collateral can move more freely, allowing firms to optimise their balance sheets in real time. Third, fractionalisation opens the door to broader distribution—investors who could not afford a whole bond can buy a fraction of one.

LSEG’s depository is designed to make all of this possible without forcing every participant to rebuild their back offices from scratch.

The 2026 Roadmap: Regulatory Hurdles and Strategic Partners

LSEG has set a clear timeline, but it comes with a critical asterisk. The first deliverable of the Digital Securities Depository is planned for 2026, subject to regulatory approval.

That approval is not guaranteed, but it is increasingly likely. The UK government has signalled its ambition to become a global hub for digital securities, and the Financial Conduct Authority has been running a sandbox for firms experimenting with tokenisation. LSEG is effectively building the infrastructure that regulators have been asking for.

Between now and 2026, LSEG will expand its strategic partner group beyond the initial banks. The goal is to create an ecosystem where issuers, investors and intermediaries can all participate under a common standard. If successful, the depository could become the default settlement layer for digital securities issued in London—and possibly beyond.

Who Is Elliott Management and Why It Matters for LSEG

To understand the politics behind LSEG’s blockchain push, you need to know Elliott Management. Founded by billionaire Paul Singer, the hedge fund is famous for taking large stakes in companies and agitating for change. It has pushed for breakups, leadership overhauls and massive share buybacks at firms ranging from AT&T to Twitter.

Elliott’s stake in LSEG is not about blockchain. The fund cares about returns. LSEG’s stock has underperformed, and Elliott sees an opportunity to unlock value. Among its requests: a multibillion-pound buyback once the current £1 billion tranche is complete, and a narrowing of the valuation gap with higher-multiple peers.

For CEO David Schwimmer, the depository is a powerful counter-argument. It shows that LSEG is not a legacy exchange waiting to be disrupted—it is a forward-looking data and technology company. If the market buys that story, the stock re-rates and Elliott gets what it wants without a hostile battle.

What This Means for Crypto Markets and Institutional Adoption

LSEG’s announcement is not a Bitcoin catalyst, but it is a powerful signal for the broader tokenisation thesis. For years, crypto advocates have argued that the real revolution is not in replacing traditional finance, but in upgrading its plumbing. Here is the London Stock Exchange making that argument itself.

The depository does not use a public blockchain like Ethereum in an unpermissioned way. It will likely rely on permissioned networks or controlled instances of public chains. But it creates a bridge. Once institutions become comfortable settling tokenised gilts on-chain, the step to settling tokenised corporate bonds—and eventually digital-native assets—becomes much smaller.

It also puts pressure on other exchanges and depositories. If LSEG succeeds, competitors like Deutsche Börse, Euronext and even the Depository Trust & Clearing Corporation in the US will have to accelerate their own digital roadmaps. The infrastructure race has begun.

Four Key Takeaways from LSEG’s On-Chain Settlement Play

Interoperability is the new battleground. The depository’s ability to connect old and new rails is its defining feature. Pure-play blockchain projects that ignore legacy systems will struggle to win institutional mandates.

Tokenisation is moving from pilot to production. LSEG already has a live digital markets platform for private funds. The depository extends that capability to public markets. This is not a proof of concept; it is a deployment.

Regulatory approval is the gating factor. 2026 is an ambitious target. Delays are possible. But the direction is clear: the UK wants to lead in digital securities, and LSEG is its chosen instrument.

Activist pressure is accelerating adoption. Without Elliott, LSEG might have moved more slowly. The combination of shareholder activism and technological opportunity is forcing traditional firms to act with urgency.

LSEG’s Digital Markets Journey: Key Milestones

To understand how LSEG arrived at this point, it helps to trace its digital markets evolution:

2019: LSEG acquires Refinitiv for $22 billion, transforming from an exchange operator into a financial data and analytics powerhouse.

2022: Partnership with Microsoft Azure announced; begins building blockchain-based platform for private funds.

2024: LSEG Digital Markets Infrastructure (DMI) goes live; first tokenised fund transactions executed on the platform.

2025: Activist investor Elliott Management builds stake; shares fall 35% amid broader software selloff.

February 2026: LSEG announces Digital Securities Depository with planned 2026 launch; major UK banks sign on as strategic partners.

Each milestone has built toward Thursday’s announcement. The depository is not a sudden pivot—it is the logical next step in a strategy that has been quietly unfolding for years.

What Comes Next

LSEG will spend the coming months assembling its strategic partner group and engaging with regulators. A formal proposal will need to be submitted to the Bank of England and the Financial Conduct Authority. Industry working groups will likely form around technical standards and interoperability protocols.

For institutional investors, the message is clear: the infrastructure for tokenised assets is being built, and it will be compatible with the systems they already use. The era of blockchain as a fringe curiosity is ending. It is becoming part of the furniture.

And for Elliott Management, the calculation is simple. If LSEG delivers this depository on time and the market rewards its digital strategy, the share price will follow. If not, the activist will be waiting.