JPMorgan Completes Live Blockchain Repo Trade Ahead of New Product Launch

Investment bank JPMorgan says it has completed a live intraday repo transaction using a blockchain solution that will soon see a commercial launch.

The repo trade was carried out between JPMorgan’s broker-dealer and banking entity, the bank announced Thursday.

The blockchain application used was developed in-house by the bank’s blockchain business arm, Onyx, and is said to support the settlement and maturity of such transactions in hours rather than days.

The trade also used the bank’s stablecoin jpm coin for the cash leg. Blockchain was used for both collateral and cash legs.

For context, the repo market allows financial firms such as JPMorgan to trade large quantities of securities and to borrow cheaply – allowing parties with cash to earn a small return.

Repo trades are like a short-term loan, involving a trader selling an asset to another trader at a set price and committing to repurchase the same asset, or part of the asset, at a different price at a future date.

The blockchain app will see production use, being offered to external counterparties in the U.S., according to the announcement.

Goldman Sachs and BNY Mellon have both been involved in trial trades on the platform and will be involved going forward.

Mathew McDermott, global head of digital assets at Goldman Sachs, said his institution is “looking forward to going live in early 2021.”

Brian Ruane, CEO of BNY Mellon Clearance & Collateral Management, said his bank would be a “critical partner for JPMorgan to provide much-needed collateral services to market participants looking to execute intraday repo transactions.”