JPMorgan completes a live repo transaction based on a blockchain
JPMorgan has completed a live, blockchain-based intraday repo transaction using an in-house developed application which supported instantaneous settlement and maturity of the transaction in hours, as opposed to days.
Description: JP Morgan has announced a successful blockchain-based repo transaction — with the potential to reduce such payments to hours rather than days.
JPMorgan says it has completed an operational intraday repo transaction using a blockchain solution, with a commercial launch soon to follow. The bank said on Thursday that the repo transaction was between broker-dealer JPMorgan and the banking institution. The blockchain application used was developed in-house by the bank’s blockchain arm, Onyx, and allegedly supports the calculation and maturity of such transactions in hours rather than days.
The transaction also used the bank’s JPM stablecoin as the means of settlement. Blockchain was used for both collateral and cash settlement. For context, the repo market allows financial firms such as JPMorgan to trade large volumes of securities and borrow inexpensively, allowing parties with cash to make a small profit. Repo transactions are similar to a short-term loan, where one trader sells an asset to another at a set price and commits to repurchase the same asset or part of the asset at a different price in the future.
According to the announcement, the blockchain application will be used in the production environment and will be offered to external counterparties in the US. Goldman Sachs and BNY Mellon have participated in trial transactions on the platform and will continue to do so.
Learn more about blockchain and cryptocurrencies with our Bitcoin cloud mining platform Hashmart.io!