The London Stock Exchange Group Plc (LSEG) has reportedly decided to sell some of its proprietary trading technology to the ATOM Group, a Hong Kong-registered multinational fintech firm.

According to the announcement’s press release, the ATOM Group is planning to use LSEG’s trading software for its cryptoasset exchange (called AAX). The integration of LSEG Technology’s “Millennium Exchange” platform is scheduled to be completed during the first half of this year. Notably, AAX is the world’s first digital currency exchange that will be built on LSEG’s trading platform.

At present, the Hong Kong (HKEX) and Singapore (SGX) Stock Exchanges are using “matching engines” developed by the LSEG. Integrating the institutional-grade trading software onto its exchange platform will allow the ATOM Group to provide “high performance, reliable and trusted services to investors”, the announcement noted. Institutional investors have not yet made substantial investments into digital assets because they are concerned about the lack of proper security on centralized crypto exchanges.

LSEG’s Millennium Exchange “Matching Engine”

Commenting on the importance of providing reliable and high-performance trading solutions, Ann Neidenbach, the chief information officer (CIO) at LSEG Technology, remarked:

We are delighted to have been selected by ATOM to provide a best-in-class technology solution to help power its new exchange. It underlines Millennium Exchange's reputation for performance, scalability, flexibility and reliability and we look forward to working with the AAX team ahead of the launch in H1 2019.

Crypto market analysts are expecting more regulatory clarity this year and a greater level of transparency. Acknowledging the need for compliance and better trading tools, Peter Lin, the CEO of ATOM Group, said:

The digital asset marketplace faces a critical need for more industry best practice in order to build greater investor confidence. AAX will leverage LSEG Technology's platform and expertise to deliver a world-class exchange that provides fair, trusted and secure digital asset trading for all.

In mid-October 2015, Carlson Tong Ka-Shing, the head of Hong Kong’s Securities and Futures Commission (SFC), had said the special administrative region was planning on tightening crypto regulations for local exchanges. Ka-Shing explained that there had been increasing concerns about the risks associated with trading on unregulated platforms.

Expecting Greater Institutional Involvement

Due to increased regulatory oversight expected this year, it’s likely that new and existing crypto exchanges in Hong Kong and in other jurisdictions will be implementing improved security measures. Anticipating greater participation and contributions from institutional players, Ling noted: 

With institutions such as Fidelity Investments entering the market and others also gearing up for entry, we predict the digital asset class is primed for entry by institutional and mainstream investors in 2019.

Notably, the “agreement with LSEG Technology” will allow AAX to offer:

  • “Institutional-grade technology” as used by established traditional exchanges including the LSEG, HKEX and SGX,
  • “Scalable, compliant platform” as used by regulated markets worldwide, and
  • “Industry standard process and operational excellence.”

The AAX platform will also reportedly “leverage global security” tools provided by Kroll, an online security solutions provider.