JP Morgan has announced a successful blockchain-based repo transaction – with the potential to reduce such payments to hours rather than days.

The intraday repo transaction, between JP Morgan’s broker dealer and banking entity, was settled on both ends through blockchain technology. The cash leg used JPM Coin, a digital coin designed for instantaneous payments, to facilitate the transaction.

“The repo market provides a widely used form of secured financing, however current operational limitations prevent the meaningful use of such financing to meet intraday liquidity needs,” the company wrote. “Using blockchain enables borrowers and lenders to execute shorter-term, intraday repo transactions with real-time, simultaneous transaction settlement, creating new ways to access intraday liquidity.”

The financial services giant simulated trades with Goldman Sachs among other entities to help prepare for the test run, with BNY Mellon as the custodian.

“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, JP Morgan head of markets DLT. “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 JP Morgan,” added Lucas.

In October, JP Morgan launched Liink, a rebadging of its blockchain-based Interbank Information Network (IIN). Two new applications were launched: Confirm, which allows for validation of account information prior to initiating a payment, while Format enables the checking of a payment message to accurately fit key country- and currency-specific information requirements.

Interested in hearing more in person? Find out more at the Blockchain Expo World Series, Global, Europe and North America.   
The offering will be made available in production to external counterparties in the US.

The post JP Morgan completes successful blockchain-based repo transaction appeared first on The Block.

Read the original post: JP Morgan completes successful blockchain-based repo transaction

Organize your team with Milanote.

Enjoy relaxed ambient music byTPV Media.

By lecrab