Goldman uses JP Morgan’s blockchain for repo transaction
According to a recent Bloomberg report, Goldman Sachs has started using JP Morgan’s blockchain for a repo transaction.
Goldman’s first trade was made on June 17 and lasted just over three hours. The exchange consisted of an exchange of a tokenized version of a US Treasury bill with JPMCoin, JP Morgan’s stablecoin.
Pensions, short for pensions, are used by financial institutions to raise short-term funds. With a repo, financial institutions can sell securities to someone else and buy them back later at a higher price (usually within 48 hours, if not sooner). The buyer earns interest while the financial institution is able to raise short-term funds.
According to the Bloomberg report, Mathew McDermott, global head of digital assets for Goldman’s global market division, said the development of blockchain technology could be of huge benefit to the multibillion-dollar repo market. Indeed, pensions involve the simultaneous exchange of cash and collateral.
The use of blockchain applications therefore supports “instant transaction settlement and maturity in hours, as opposed to days,” according to a December report from JP Morgan.
Scott Lucas, Head of DLT Markets at JP Morgan, said the solution “will help unlock pockets of trapped cash for intraday use and reduce risk profiles for our clients and JP Morgan.”
JP Morgan started using its in-house-developed blockchain application, Onyx, for repo transactions in December. As part of the viability tests of the new applications, transactions were simulated with several entities, including Goldman Sachs. Bank of New York Mellon acted as tripartite agent.
Since December, more than $ 1 billion a day has been traded through the Onyx blockchain platform. According to a JP Morgan spokesperson, the company is currently in discussions with more than ten banks and investor clients to join their new pension networks.
BNY Mellon served as the on-call agent for all transactions.
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