JPMorgan tests blockchain for collateral settlement in after-hours trading

“What we’ve achieved is the frictionless transfer of collateral assets on an instantaneous basis,” said JPMorgan’s global head of trading services, Ben Challice.

Multinational investment bank JPMorgan Chase & Co is reportedly testing the use of its own private blockchain for collateral settlements.

According to Bloomberg, JPMorgan conducted a pilot transaction last Friday that saw two of its entities transfer a token representation of shares in money market fund Black Rock Inc.

A money market fund is a type of mutual fund that is considered a low-risk investment because it provides exposure to liquid, short-term assets such as cash, cash equivalents, and debt securities with rated high credit.

Regarding JPMorgan’s broader vision for its private blockchain, the bank said it intends to allow investors to offer a wide range of assets as collateral that can also be used outside normal hours. Steps. He highlighted equities and fixed income in particular.

“What we’ve achieved is the frictionless transfer of collateral assets on an instantaneous basis,” said JPMorgan’s global head of trading services, Ben Challice. BlackRock was not a counterparty, but has been heavily involved in the initiative “from day one and is exploring the use of this technology.”

JPMorgan has been actively involved in crypto and blockchain technology for some time now, and also founded Onyx Digital Assets (ODA) in late 2020. The project is described as a “blockchain-based network that enables processing, registration and delivery-versus-exchange of payments (DVP) of digital assets between asset classes. »

Although it was not specifically stated whether JPMorgan used ODA in this instance, the network is designed to exchange cash for different types of token collateral, providing intraday liquidity and providing access to the bank’s digital payment infrastructure and the JPM Coin token. .

Tyrone Lobban, Head of Blockchain Launch at JPMorgan and ODA, said the bank aims to get ahead of a trend in which it sees a wider range of traditional financial services being offered via blockchain technology:

There will be an increasing set of financial activities taking place on the public blockchain, so we want to ensure that we are able to not only support this, but also be ready to provide related services.

Earlier this week, European bank BNP Paribas made its first transaction through the ODA to explore token trading in the fixed income market.

Speaking on the go, Christopher Korpi, Managing Director of BNP Paribas Global Markets and Head of US Repo Trading and Sales, highlighted the importance of being able to streamline processes through blockchain technology:

Tokenized assets and Onyx Digital Assets will enable precise intraday liquidity management. As such, they could be fundamental in adding speed to collateral, collateral settlement and ultimately reducing systemic risk through reduced intraday credit. Onyx Digital Assets will further strengthen the intraday fungibility of UST and USD Cash.

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