Tokenization as an efficiency booster: Finexity, London Stock Exchange, eToro

Finexity: Growth with private markets

The Hamburg-based company Finexity operates a digital exchange for tokenized private markets such as private credit, real estate, infrastructure, renewable energy, and art collections. The platform connects issuers of digital securities with regulated trading partners, including savings banks, credit unions, and asset managers, and currently has more than 84,000 registered investors. Finexity covers the entire value chain, from economic consulting and structuring to tokenization, subscription, OTC trading, and securities settlement. To date, the platform has listed around 250 securities from 50 issuers.

In the coming quarters, Finexity's exchange is set to become a fully regulated multilateral trading facility (MTF). The Company plans to submit the relevant applications before the end of this year. At the same time, the Company is planning further acquisitions following its recent purchase of 90.1% of the shares in Effecta GmbH, its liability umbrella company. Potential targets are primarily intended to advance Finexity technologically and complement the business model of the Company, which is considered one of the German pioneers in the field of tokenization. The fact that Finexity has been listed on the stock exchange itself since this month is convenient – its own shares could be used as takeover currency in the future. The private markets sector, in which Finexity operates, has so far been reserved primarily for professional investors and promises significant growth. Finexity AG's stock market debut has been successful so far. Unlike many comparable IPOs, there is no selling pressure from existing shareholders at Finexity.

London Stock Exchange: Tokenized issuances as a growth driver

Innovative technology is also playing a growing role at the London Stock Exchange (LSE). The Group includes the London and Milan stock exchanges, several clearing houses, the index providers FTSE Russell, and various financial information providers. Just recently, the LSE launched the Digital Markets Infrastructure (DMI) project in collaboration with Microsoft Azure. The DMI platform enables the tokenized issuance and management of private funds using blockchain technology, aiming to achieve economies of scale and efficiency across the entire asset lifecycle. The exchange operator emphasizes its desire to be a global leader in the development of digital asset ecosystems. For management, the digitization of financial markets is one of the key trends for the future.

eToro: A challenge to stock exchange operators

The eToro trading platform has also proven to be innovative in the past and is considered one of the pioneers in the field of social trading. Up to 40 million users can trade stocks, ETFs, cryptocurrencies, foreign exchange, and CFDs or copy other investors' portfolios. eToro also sees great opportunities in the area of tokenization. CEO Yoni Assia repeatedly emphasizes that blockchain technology will lead to the largest transfer of wealth in history by tokenizing traditional assets. In July, eToro announced that it would offer selected US stocks in tokenized form and allow them to be traded around the clock. This is a challenge to operators of traditional exchanges, which are bound by specific trading hours.

Finexity: Well-positioned for the future

When you consider that tokenized securities promise significant efficiency gains with every transaction, it stands to reason that more and more traditional assets will gradually be transferred to the blockchain. While the pressure to act does not yet seem so great for traditional stocks—after all, the fees are already manageable today—the potential for real assets or other private markets is significantly greater. Here, tokenization also ensures that these asset classes are first discovered by private investors. The Hamburg-based company Finexity is ideally positioned to benefit from this development. With active involvement in regulatory developments over recent years, the Company has laid a strong foundation for targeted acquisitions and an integrated service offering. The Finexity share, which is listed on the Munich Stock Exchange, is worth a closer look.