The London Stock Exchange Group (LSEG) has announced plans to build an on-chain settlement capability.

The LSEG Digital Securities Depository (DSD) is a market infrastructure solution designed for institutional market participants.

LSEG said the capability will be fully interoperable, connecting traditional and digital markets, supporting multiple chains, and providing "seamless" interaction between existing settlement platforms and emerging digital infrastructures.

According to the stock exchange, the new DSD capability will facilitate greater collateral management efficiencies and facilitate access to liquidity for a broad range of assets, including fixed income, equities, and private markets.

As part of the design and go-to-market process, LSEG said it will form a strategic partner group to ensure market feedback is incorporated into the build.

The first deliverable is planned for 2026, subject to regulatory approval.

The move comes after LSEG launched a DLT-based Digital Markets Infrastructure (DMI) last year. The infrastructure, which is powered by Microsoft Azure, enables tokenisation and broader distribution of funds.

“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," said Daniel Maguire, group head of markets, LSEG.

Rob Hale, co-head of global markets at Lloyds Banking Group, welcomed the announcement, confirming that the bank will work with LSEG to "help clients operate more efficiently" and unlock new opportunities in light of the update.

"Through our work with tokenised deposits, tokenised gilts and digital wallets, we’ve seen how these innovations can deliver real benefits for businesses and investors," he said. "These capabilities can help clients compress settlement cycles, reduce operational risk and access liquidity more efficiently – ultimately improving how they raise, deploy and manage capital."

Matt Harvey, head of digital solutions at NatWest Markets, said that the LSEG DSD represents an "important step" in modernising the UK's financial market infrastructure.

"As digital securities move from pilot to scaled adoption, solutions that combine regulatory rigour with genuine interoperability will be critical," he continued.

Barclays, Standard Chartered, and State Street also welcomed the news along with Sir Ron Kalifa, head of financial infrastructure at Brookfield.

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