The move by JPMorgan to commercial its repo transaction and the associated blockchain solutions has attracted other industry giants including Goldman Sachs and Bank of New York Mellon.
American multinational investment bank and financial services holding company JPMorgan Chase & Co (NYSE: JPM) has announced that it has completed a live intraday Repo transaction using blockchain technology. According to the official announcement, the JPMorgan blockchain-based repo transaction was successfully conducted between JPMorgan’s broker-dealer and banking entity with the help of an in-house application developed by Onyx, JPMorgan’s blockchain enterprise unit.
JPMorgan has through this new solution revealed its foremost influence in using blockchain technology to address real-world enterprise challenges. With a track record of similar enterprise blockchain-based solutions, the banking giant has further extended the inherent capabilities in blockchain technology and its associated stablecoins.
Through the JPMorgan repo transaction, market participants are able to have access to financing needs to meet their intraday financial obligations. According to JPMorgan, the blockchain-based repo transaction ensured settlements and maturity of the transaction in hours, as opposed to days.
The blockchain solution serves as a one-stop platform for both borrowers and lenders to enter short-term cash financing contracts that are settled much more easily than what is currently obtainable. The two facets of the financing transaction which includes the collateral and cash were settled using blockchain and the JPM Coin, the investment banking giant’s stablecoin.
“The current repo market has some technical inefficiencies, and we identified blockchain technology as a way to reduce our clients’ intraday risk profile,” said Scott Lucas, Head of Markets DLT, JPMorgan. “By deploying blockchain, we created new opportunities to streamline operational processes and accelerate settlement for repo. Our new solution will help unlock trapped pockets of liquidity for intraday use and allow for reduced risk profiles for our clients and JPMorgan.”
While the repo transaction is still in the trial stages, plans for commercialization by 2021 are in place.
JPMorgan Repo Transaction Gets Backing from Industry Partners
The move by JPMorgan to commercial its repo transaction and the associated blockchain solutions has attracted other industry giants including Goldman Sachs Group Inc (NYSE: GS) and Bank of New York Mellon Corp (NYSE: BK). Both partners and the others that will be leveraging the Onyx developed solution are crucial to the entire blockchain solution ecosystem as they offer a unique value and support to the system.
“BNY Mellon is pleased to leverage our expertise as a critical partner for J.P. Morgan to provide much-needed collateral services to market participants looking to execute intraday repo transactions. The distributed ledger technology utilized ensures that clients are meeting their funding needs, and quickly,” said Brian Ruane, Chief Executive Officer of BNY Mellon Clearance & Collateral Management.
In the coming weeks and before the eventual commercial rollout of the blockchain repo transaction offerings, JPMorgan’s Onyx unit will continue to work on the scalability and functionalities of the blockchain platform for a smooth experience for all players that will be using the platform.