J.P. Morgan Executes Intraday Repo Transaction Using Blockchain
JP. Morgan (JPM) announced that it had completed a live, blockchain-based intraday repo transaction. JPM announced that it had completed a live, blockchain-based intraday repo transaction. The transaction was successfully conducted between JPM’s broker-dealer and its banking entity, using an in-house developed blockchain application that supports instantaneous settlement and maturity of the transaction in hours, as opposed to days.
According to JPM, which has a major presence in US repo markets, 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.
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. Both collateral and cash legs of the repo transaction were settled using blockchain, with the cash leg settled using JPM’s digital coin, JPM Coin.
The offering will be made available in production to external counter-parties in the US – some of which have already simulated transactions on the new application. JPM developed the product and tested its viability by conducting trades between two of its affiliates, alongside successful simulations of trades with Goldman Sachs and other entities, with BNY Mellon as the tri-party agent.