JPMorgan, one of the global leaders in financial services, has confirmed the use of its JPMCoin to execute a blockchain-based repo transaction. The announcement is coming two months after the banking giant launched its blockchain coin “Onyx.” The move to use a digital asset in a repo transaction signals a significant adoption of blockchain tech by major financial institutions.
Speaking on the repo transaction, JPMorgan noted that the use of blockchain translated into an “atomic trade settlement.” Scott Lucas, Head of Markets DLT, JPMorgan, stated that blockchain could help eliminate inefficiencies in the repo market. He said:
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. 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.
Following successful trial runs, the bank plans to make its product available to external counterparties in the US. The viability of the solution has already been tested by JPMorgan who conducted successful trade simulations between rival Goldman Sachs and other entities, with BNY Mellon as a tripartite agent.
Mathew McDermott, Global Head of Digital Assets at Goldman Sachs, commenting on the solution said:
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.