The London Stock Exchange Group is planning to build a blockchain-powered marketplace for traditional assets, according to a report today from the Financial Times, which will make it the first major exchange to offer such a service.

Blockchains are best known for powering cryptocurrencies, such as bitcoin and Ethereum. They employ distributed digital ledger technology that uses cryptography to create tamperproof audit trails for transactions. The exchange said it doesn’t intend to implement cryptocurrencies on its platform but instead use the technology to assist with trading traditional financial instruments.

Murray Roos, head of capital markets at LSE Group, told the Financial Times that the company had been examining the potential for blockchain technology for trading for about a year and now had decided to take a project forward. Julia Hoggett, head of the London Stock Exchange, a unit leader in the group, would spearhead the project, which would form its own business group.

The London Stock Exchange Group is among the biggest global financial markets in the world and is comparable to big names such as the New York Stock Exchange and the Nasdaq stock market.

“The idea is to use digital technology to make a process that is slicker, smoother, cheaper and more transparent … and to have it regulated,” Roos said.

Using blockchain technology, traditional assets can go through a process known as “tokenization.” That’s where assets are represented on the blockchain as cryptoassets, or tokens, which can be tracked as transactions on the digital ledger. As a result, they gain the tamperproof and historical auditability benefits provided by the blockchain.

A multitude of different financial and real-world assets can be represented by blockchain tokens including securities, stocks, bonds and even commodities. This technology has been explored by numerous other companies including Dinari, which tokenizes securities and stocks and real estate tokenization firm RealBlocks. Another example includes tokenized fine wine commodities from Fine Wine AG, which used Syngum’s digital ledger solution to create blockchain-based wine assets in Swiss markets.

LSE Group is choosing the implement a blockchain-powered market to provide customers a new way to make traditional securities transactions because it can deliver easier trading capabilities. Proponents of blockchain technology claim that the technology helps standardize transactions between parties globally because the tokens are the same and transaction times are extremely low, which makes the exchanges almost instantaneous.

To accommodate this capability, LSE Group is already working with regulators in multiple jurisdictions, as well as the Treasury in the U.K.

For example, with operations across the globe, it would be able to make a transition between multiple parties, such as a buyer in Switzerland, a Japanese asset and American seller happen with ease. Such a transaction would be cumbersome and involve multiple hands and lots paperwork in a traditional system. With a blockchain network, the software and ledger would track all of it with its own historical audit trail.

“The ultimate goal is a global platform that allows participants in all jurisdictions to be able to interact with people in other jurisdictions completely abiding by rules, laws and regulations, potentially multiple jurisdictions simultaneously, which is something that hasn’t been possible in an analog world,” Roos told the Financial Times.

Roos said the new business unit could launch within a year, pending regulatory approval. It will initially focus on private markets, since activity there is particularly complex, but after the model has proven itself, it could expand to other assets.

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