Count this as a significant sign of blockchain adoption among the finance majors.
JPMorgan announced on Thursday that it executed a blockchain-based repurchase agreement transaction, leveraging its eponymous JPMCoin. The announcement comes two months after JPMorgan unveiled a rebrand of its blockchain unit — now dubbed Onyx — and said that its stablecoin-like product had gone into production.
As for the repo transaction, the bank said the use of blockchain translated into an "atomic trade settlement." The maturity of a transaction on the platform can take hours, rather than days, according to the bank.
The repo market is where big banks go to borrow money from other large financial institutions to cover operating costs — typically, to be priced within a day or so. The market is known for its inefficiencies.
"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 bank said in a press release. "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 bank plans to make its product available to other counter-parties in the future. Already, rival Goldman Sachs has conducted successful trade simulations with BNY Mellon serving as a triparty agent.
“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,” said Mathew McDermott, Global Head of Digital Assets at Goldman Sachs.