London Stock Exchange Group (LSEG) has announced plans to develop an on-chain settlement capability through a new market infrastructure solution, the LSEG Digital Securities Depository (DSD), aimed at institutional market participants.

The DSD is designed to support interoperability between traditional settlement systems and emerging digital infrastructures, allowing participants to move assets across both environments while interacting with multiple blockchains. LSEG said the first deliverable is expected in 2026, subject to regulatory approval.

The initiative builds on LSEG’s existing Digital Markets Infrastructure (DMI), a DLT-based platform powered by Microsoft Azure, which has already been used to support tokenisation and fund distribution workflows.

On-Chain Settlement To Improve Liquidity And Collateral Mobility

LSEG said the DSD capability is expected to improve collateral management efficiency and unlock greater access to liquidity across a broad range of assets, including fixed income, equities, and private market instruments.

The group said it is positioning the DSD as part of a longer-term shift toward tokenised securities, with a future vision in which most bonds traded on exchanges — and eventually most securities — are issued and settled in tokenised form.

By enabling on-chain settlement functionality, LSEG aims to reduce settlement friction and improve transparency, while ensuring that market participants can interact seamlessly with both digital and traditional rails.

Takeaway

LSEG’s Digital Securities Depository signals a strategic push toward institutional-grade on-chain settlement, with the potential to compress settlement cycles and improve collateral efficiency across both traditional and tokenised securities markets.

Interoperability And Multi-Chain Design Positioned As Core Features

LSEG said the DSD will be fully interoperable and designed to connect existing settlement platforms with new digital infrastructures, supporting multiple blockchain networks and offering flexibility in how assets are settled and transferred.

The group said the infrastructure is being developed with the goal of enabling seamless interaction between traditional market plumbing and digitally native systems, allowing institutions to move between both environments without fragmentation.

Daniel Maguire, Group Head of Markets at LSEG, said the initiative is intended to build a unified ecosystem that enables participants to operate across time zones and payment options.

“We look forward to welcoming new strategic partners as we build LSEG Digital Market Infrastructure – a seamless ecosystem in which participants can move effortlessly between digital and traditional markets, connected across time zones and choice of payment options,” Maguire said.

Takeaway

Unlike many tokenisation pilots focused on single-chain environments, LSEG is positioning the DSD as a multi-chain interoperable settlement layer designed to integrate directly with legacy settlement systems.

Major Banks And Institutions Support LSEG’s Digital Settlement Vision

LSEG said it will form a strategic partner group as part of the design and go-to-market process to incorporate market feedback and support scale for issuance, trading and settlement of both digitally native assets and tokenised representations of traditional securities.

Participants in the programme will be announced in due course, but early statements from major institutions indicate strong support for the initiative, particularly around interoperability and regulatory alignment.

Ryan Hayward, Head of Digital Assets at Barclays, said the DSD represents progress in the adoption of digital assets within UK markets.

“LSEG’s Digital Securities Depository is a positive step in the development and adoption of digital assets across UK markets. Barclays will continue to work with the UK government, LSEG and other providers on exploring a range of digital assets, as well as developing our own use cases,” Hayward said.

Other institutional endorsements included Brookfield, Lloyds, NatWest Markets, Standard Chartered, and State Street, with executives highlighting settlement compression, operational resilience, and the need for infrastructure that bridges traditional and digital capital markets.

Takeaway

With backing from major banks and market participants, LSEG’s DSD initiative reinforces the accelerating institutional shift from tokenisation pilots toward scalable digital settlement infrastructure under regulatory oversight.