The London Stock Exchange Group has invested the unknown amount to acquire a minor equity stake in London-based Fintech startup called Nivaura and led the $20 million dollars ($15 million pounds) funding round followed by the venture capital arm of Banco Santander– Santander InnoVentures.
Nivaura is blockchain startup that let the companies issue bonds and other financial instruments on the blockchain. Launch in November 2017, Nivaura became the world’s first Fintech startup that automated cryptocurrency-denominated bond issuance & other financial instruments on the blockchain.
Issuing & settling the equities and bonds is multiple steps process and requires the involvement of multiple middlemen. Multiple steps lead to inefficiency and excessive costs. Leveraging the blockchain for tokenizing equity and debt can turn this multi-step complex process of trading financial instruments into hassle-free, instantly tradeable tokens. According to Nivaura, tokenizing the financial instruments such as equity, derivatives, corporate bonds, loans etc. can save up to 80% in time and money & could dramatically reduce the cost of raising capital for enterprises. It is a digital platform diminishes the requirement of the middle man that leads to faster executions and easy settlement with minimal cost.
It isn’t the first time that LSEG has shown interest in cryptocurrency and blockchain based projects. Previously. London Stock exchange group has worked with Hong-Kong based cryptocurrency exchange where it had provided its matching system to trade crypto & with IBM in 2017, to develop a blockchain based platform that allows the enterprises in Italy to issue private equity digitally.
Head of international development at LSEG, Nikhil Rathi told Reuters that LSEG is exploring the blockchain to diversify the existing product portfolio and to bring out the new financial instruments resulting in consistent growth of the exchange and hassle-free trading experience to their customers.
Nivuara investment by London stock exchange group & Santander InnoVentures is the latest but not the first investment in the growing trend of major financial institutions harnessing the blockchain technology to explore the way to automate the issuance, settlement and trading process of financial instruments. These major firms include the world’s leading investment bank JP Morgan Chase, which has recently announced their own cryptocurrency prototype called JPM coin. Hong-Kong and Shanghai banking corporation or HSBC is also using the blockchain-based platform to cut the cost of settling international transactions.