J.P. Morgan executes intraday repo transaction using blockchain
11 December 2020 US
Image: denisismagilov/adobe.stock.com
J.P. Morgan has completed a live blockchain-based intraday repo transaction, conducted between its broker-dealer and banking entity, using an in-house developed blockchain application.
This supported instantaneous settlement and maturity of the transaction in hours, as opposed to days, says the bank.
The offering will be made available in production to external counterparties in the US – some of which have already simulated transactions on the new application.
J.P. Morgan developed the solution and tested its viability by conducting trades between two of its affiliates, alongside successful simulations of trades with Goldman Sachs and other entities, with BNY Mellon as the triparty agent.
“This is an exciting project which vividly highlights where enterprise blockchain can address a real-world problem in the financial system and we look forward to going live in early 2021," says Mathew McDermott, global head of digital assets at Goldman Sachs.
Scott Lucas, head of markets, distributed ledger technology (DLT) at J.P. Morgan, adds: “The current repo market has some technical inefficiencies, and we identified blockchain technology as a way to reduce our clients’ intraday risk profile.”
“By deploying blockchain, we created new opportunities to streamline operational processes and accelerate settlement for repo," he adds. "Our new solution will help unlock trapped pockets of liquidity for intraday use and allow for reduced risk profiles for our clients and J.P. Morgan.”
Elsewhere, J.P. Morgan recently unveiled Onyx, a new business unit to scale and commercialise blockchain innovation, with JPM Coin as a key offering from the suite of products, platform, and services.
Christine Moy, who leads the Onyx team, says: “J.P. Morgan’s intraday repo application demonstrates how leveraging foundational technology built by Onyx enables new capabilities like the digital representation of securities ownership, supports unique functionality like atomic trade settlement, accelerates time-to-market, and eases the effort required to get to production.”
Brian Ruane, CEO of BNY Mellon, clearance and collateral management, adds: “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 DLT utilised ensures that clients are meeting their funding needs, and quickly.”
This supported instantaneous settlement and maturity of the transaction in hours, as opposed to days, says the bank.
The offering will be made available in production to external counterparties in the US – some of which have already simulated transactions on the new application.
J.P. Morgan developed the solution and tested its viability by conducting trades between two of its affiliates, alongside successful simulations of trades with Goldman Sachs and other entities, with BNY Mellon as the triparty agent.
“This is an exciting project which vividly highlights where enterprise blockchain can address a real-world problem in the financial system and we look forward to going live in early 2021," says Mathew McDermott, global head of digital assets at Goldman Sachs.
Scott Lucas, head of markets, distributed ledger technology (DLT) at J.P. Morgan, adds: “The current repo market has some technical inefficiencies, and we identified blockchain technology as a way to reduce our clients’ intraday risk profile.”
“By deploying blockchain, we created new opportunities to streamline operational processes and accelerate settlement for repo," he adds. "Our new solution will help unlock trapped pockets of liquidity for intraday use and allow for reduced risk profiles for our clients and J.P. Morgan.”
Elsewhere, J.P. Morgan recently unveiled Onyx, a new business unit to scale and commercialise blockchain innovation, with JPM Coin as a key offering from the suite of products, platform, and services.
Christine Moy, who leads the Onyx team, says: “J.P. Morgan’s intraday repo application demonstrates how leveraging foundational technology built by Onyx enables new capabilities like the digital representation of securities ownership, supports unique functionality like atomic trade settlement, accelerates time-to-market, and eases the effort required to get to production.”
Brian Ruane, CEO of BNY Mellon, clearance and collateral management, adds: “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 DLT utilised ensures that clients are meeting their funding needs, and quickly.”
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