“What we have achieved is the frictionless transfer of collateral assets upon an instantaneous base,” said Ben Challice, JPMorgan’s global head for trading services.
JPMorgan Chase & Co, a multinational investment bank, is reportedly testing the use of its private Blockchain to settle collateral claims.
Bloomberg reports that JPMorgan executed a pilot transaction on 20 May, in which two entities transferred tokenized representations of Black Rock Inc. money-market fund shares.
Money market funds are a type mutual fund that offers liquidity and short-term exposure. They can be used to invest in liquid assets, such as cash equivalents, debt securities with high credit ratings, and cash.
JPMorgan’s broad vision for its private Blockchain stated that it wants to allow investors to offer a wide variety of assets as collateral. These assets can be used even outside of normal market hours. The bank emphasized fixed income and equities in particular.
“What we have achieved is the frictionless transfer of collateral assets upon an instantaneous base,” said Ben Challice, JPMorgan’s global head for trading services. Although BlackRock was not a counterparty to the initiative, it has been involved “since day one” and is exploring how this technology can be used.
JPMorgan has been involved in crypto, blockchain tech since a while now. In late 2020, JPMorgan also founded Onyx Digital Assets. The project is described as a “blockchain-based network that enables the processing, recording and Delivery-versus-Payment (DVP) exchange of digital assets across asset classes.”
Although it was not specifically stated if JPMorgan used ODA in this instance. The network is set up for the exchange cash for various types of tokenized collateral. This provides intraday liquidity and allows access to the bank’s digital payment infrastructure as well as token JPM Coin.
Tyrone Lobban is the head of JPMorgan’s Blockchain Launch, and the ODA. He said that the bank wants to be ahead of a trend where it sees a wider range of traditional financial services being offered through blockchain tech.
“There will be an increasing number of financial transactions that take place on the public blockchain. We want to ensure that we can not only support those but also that we have the ability to provide related-services.”
European bank BNP paribas executed its first trade via the ODA earlier this week to explore tokenized fixed-income market trading.
Related: JPMorgan sets BTC’s fair price at $38K and declares crypto as a preferred alternative asset
Christopher Korpi, BNP Paribas Global Markets’ managing director and head US repo sales and trading, spoke out about the importance of using blockchain technology to streamline the company’s processes.
“Tokenized assets, Onyx Digital Assets and Onyx Digital Assets allow for precise intraday liquidity administration. They could serve as a foundation for adding velocity to collateral and security settlement, and ultimately, decreasing systemic risk through the reduction of intraday debt. Onyx Digital Assets will also increase the intraday fungibility USD Cash and UST.
