Julie Becker, CEO of the Luxembourg Stock Exchange, believes that the digitalisation of capital markets is not only a powerful lever of innovation and performance, it will also help develop sustainable finance and facilitate the financing of investment projects with positive green and social outcomes. She told us why and how LuxSE intended to build on the power of new technology to contribute to more efficient and digital capital markets.

TS: In January, the Luxembourg Stock Exchange announced that security tokens could be admitted on its Securities Officials List, aka LuxSE SOL, and Société Générale became the first issuer to bring its security tokens to LuxSE. What is your vision of the future development of digital assets and what role will institutions like yours play in shaping it? 

JB: "Digitalisation is taking every industry by storm, and the capital markets industry is no exception. In recent decades, technology has transformed the ways in which stock exchanges operate, and this will continue to be the case in the years to come." 

"At the Luxembourg Stock Exchange, we are fully aware of how important it is to keep up with the rapid pace of digitalisation, and we are committed to modernising and digitising our exchange and contribute to more digital capital markets overall." 

"We firmly believe that using DLT to issue financial instruments represents an important step towards the digitalisation and modernisation of financial markets, one that can contribute to creating a more open and accessible financial system. Digital assets such as security tokens have the potential to improve efficiency and provide additional transparency in financial markets, all while making transactions safer and more resilient." 

"This is also reflected in the proposed EU Pilot Regime for Market Infrastructure based on DLT, which will come into force in March 2023, permitting the processing of security tokens through market infrastructures in compatibility with applicable EU regulations during a transitional period. It will mark a significant step in the EU’s ambitions to prepare capital markets for a digital future, support digital innovation, and strengthen consumer and investor protection while ensuring financial stability." 

"As a stock exchange, we are at the centre of the financial industry, and we therefore have a responsibility to innovate and drive capital markets forward. The admission of security tokens at LuxSE constitutes a true milestone for EU financial markets, in that we are the first exchange in the EU to offer this unique, innovative and publicly accessible solution for issuers and investors of these instruments. More importantly, the admission of DLT securities on LuxSE SOL provides important visibility to DLT instruments and their issuers and facilitates the dissemination of indicative prices and securities data on this new form of financial instruments." 

"As a market operator, we have a role to play in the use of DLT in financial markets. Our aim is to ensure the interoperability of DLT issuance platforms, to avoid market fragmentation." 

"Without a doubt, this is a major step towards the digital transformation of our exchange, and a very first building block in our contribution towards price dissemination, data and transparency of financial instruments issued using DLT. Ultimately, we hope that this initiative will encourage other financial players to capitalise on this disruptive technology and help meet our industry’s evolving business needs in tomorrow’s digital economy. "

TS: Four years ago, LuxSE undertook a strategic reflection exercise on the future evolution of its existing technological assets and resources. This led to an ambitious digital transformation programme directed towards becoming an agile organisation at multiple levels and entailing a move to the Cloud. How did this enable LuxSE to deliver new solutions faster and ensure better flexibility and accessibility for clients, employees, and other stakeholders? 

JB: "As I mentioned earlier, digitalisation is becoming increasingly important across all industries – and even more so in finance. If you don’t innovate, both in terms of the resources you offer your employees and the solutions your clients benefit from, you risk being left behind." 

"Moving our entire infrastructure to the Cloud is a complex project, but also a key part of our digital agenda. Thanks to this move, we are constantly improving connectivity, flexibility, and speed, both for our clients and for our teams."

"Our move to the cloud enables us to be much more agile and better respond to different needs and expectations. It allows us to provision additional capacity and allocate our resources according to where they are needed, without affecting our business operations. Cloud computing also offers the ability to distribute data across multiple servers to make applications scalable and resilient." 

"In 2019 and 2020, our efforts focused primarily on the technological teams, but since 2021, our business lines have been much more involved, and they are gradually using a growing number of applications based on our new Cloud-based standards."

"Our move to the cloud has been implemented to strengthen our interactions with our clients, partners and other stakeholders, while also increasing our own reactivity and productivity. While we are still in the process of completing this migration, we are already starting to reap the benefits of this transition, both internally and externally." 

"Ultimately, digitalisation is about more than just improving connectivity and flexibility and reducing costs – it is about simplifying processes, both for our clients and for our teams internally." 

TS: How can digital solutions using technological advances such as Artificial Intelligence, automation, distributed ledgers and cloud technologies, among others, help improve the stock exchange listing process and other capital market operating modes?  

JB: "As market operators, we are service providers to capital markets and we can capitalise on the power of new technology to contribute to more efficient and digital capital markets."

"One of the main benefits of making capital markets more digital is that we can better meet our clients’ needs, and help make their tasks and the overall listing process more seamless and efficient. This was the objective of our e-Listing tool which now allows our frequent issuers to carry out the listing process at LuxSE completely online."  

"In 2019, we acquired a stake in the London-based fintech Origin, a company working to streamline and digitise the still quite manual, time-consuming and complex bond issuance process. Thanks to our cooperation and the technical developments we achieved with Origin, we successfully completed the first fully digital listing of a debt security on LuxSE via Origin’s digital platform in March 2021. Issuers can now “List in a click” on LuxSE via Origin’s platform." 

"Digital transformation is also synonym with taking bolder steps, and this means making the most of new technologies. New tech solutions such as DLT and asset tokenisation can help integrate capital markets, safeguard financial stability and more importantly, secure consumer protection." 

"Digital innovations and FinTech have made financial services such as bank services much more accessible, and we now need to do the same for capital markets and remove barriers to entry." 

TS: Our societies are simultaneously engaged in a digital transformation and a green transition. Despite some apparent contradictions between both trends, can one be done without the other? 

JB: "The European Commission has made the green and digital transition its overarching priority, so in short, the answer to this question is no – one cannot be done without the other. On the one hand, the digital transformation of our societies is inevitable, while on the other hand, the green transition is a necessity."  

"One could argue that digital transformation has to a certain extent helped highlight the need for the green transition. What is clear is that digital transformation goes hand in hand with the need to shift towards more sustainable business models and behaviours. More importantly, it has the potential to accelerate the transition to net zero in many sectors." 

"This twin transition, and the increased focus on and investments in green solutions and digital developments will affect our economy and our society, and most definitely transform capital markets as a whole." 

"We have seen an exponential growth in sustainable finance over the past five years, but there is still a long way to go. Finance needs to be at the heart of the solution to our global challenges, starting with climate change, and that means that we need to transform finance from the inside out." 

"We ought to mobilise capital towards our climate goals, and work with all our issuers to accelerate their climate transition. But the digitalisation of capital markets will also play a key role in the success of our green transition, which is precisely why digitalisation is so important to us as an exchange. Last but not least, just as we do in sustainability, we also need to ensure convergence of standards and collaboration within the digitalisation process." 

"Finally, it is also crucial to acknowledge and address the gender gap. Having more women in digital would bring different perspectives and new ideas, which is essential to get the transition right."  

"We will continue to capitalise on new technology to simplify the listing process and reporting for our issuers, and data – including sustainability data, which is essential to drive more sustainable investment choices – will continue to play an essential role in financial markets and in financial decision making." 

"Ultimately, the digitalisation of capital markets will help make sustainable finance truly global, transparent, and facilitate the financing of investment projects with positive green and social outcomes."