The London Stock Exchange is partnering with the parent company of crypto trading platform Kraken to list tokenized stocks on its newly established overnight trading venue, marking its latest move deeper into digital markets. Under the arrangement, LSE will work with Payward to offer traders tokens tracking the prices of select large-cap British blue-chip stocks starting next year.
These tokens will be listed on the recently announced trading platform, which will operate from Monday to Friday. This initiative represents LSE's most recent foray into digital assets, as traditional exchanges, banks, and asset managers increasingly develop tokenized products amid a growing consensus that financial markets are evolving toward blockchain-based, 24/7 trading models.
Tokenized stocks are blockchain-friendly representations of company shares that can be traded around the clock across different exchanges and digital wallets, and can circulate alongside digital assets such as stablecoins. Payward operates the xStocks platform, which offers tokenized equities trading on Kraken as well as other venues including OKX and Bybit. Over the coming weeks, Payward will list tokenized versions of the UK's 100 largest stocks on its platform.
Each token is pegged at a 1:1 ratio to its corresponding traditional stock, but unlike shareholders, token holders only have limited voting rights and do not possess legal ownership of the company or entitlement to dividend payments. Mark Greenberg, chief commercial officer at Payward, noted that investors in many regions around the world want to participate in LSE asset trading with amounts as low as $1, $5, or $10, and seek to use these assets in on-chain lending wallets as well as transfer them seamlessly between crypto exchanges and wallets.
In July, LSE announced plans to launch its new overnight trading platform in the first half of 2027, operating five days per week and running separately from the main market. Simultaneously, the exchange is building a digital settlement system to enable banks, brokers, and other market participants to settle digital assets around the clock. Simon McQuaid-Mason, LSE's head of new product development, market structure, and business expansion, said the partnership would "support the future growth of public markets" as part of the exchange's broader strategy to develop regulated digital markets.
He explained that tokenized stocks "provide synthetic exposure to the underlying stock... it still tracks the underlying security but is not itself the underlying security," while noting that the company is exploring how to develop tokens "with full rights-bearing functionality." McQuaid-Mason also mentioned that LSE has held discussions with the Confederation of British Industry and certain corporations on this matter. Other exchanges, including Nasdaq in New York, are also exploring how to create and encourage companies to issue so-called native equity tokens that grant holders the same rights and ownership as shareholders.
McQuaid-Mason stated that tokenized stocks on LSE's overnight venue will be subject to the same "regulated market checks" as regular stock prices, ensuring that "shares trade within a reasonable range" and that prices reflect those on the main market. The listing of tokenized UK stocks on LSE still requires approval from the Financial Conduct Authority, with trading expected to commence in 2027.
The UK government and financial regulators are actively promoting the development of digital asset markets and the application of blockchain in financial services. Last week, the Bank of England was given a new secondary objective to foster innovation in payments and digital currencies, a strong signal that the UK aims to position itself as a competitive hub for digital asset trading.