BlackRock has achieved a successful collateral settlement trade with Barclays through JPMorgan’s Tokenized Collateral Network.
JPMorgan Chase & Co introduced the first blockchain-based collateral settlement for BlackRock on Wednesday. The largest U.S. bank by assets employed JPMorgan’s Tokenized Collateral Network (TCN) to transform shares from one of its money market funds into digital tokens. These tokens were subsequently utilized as collateral in an over-the-counter derivatives trade between the two institutions, with Barclays Plc being the counterparty.
BlackRock Completes JPMorgan Blockchain Collateral Settlement
BlackRock successfully wrapped up a collateral settlement deal with Barclays using JPMorgan’s Tokenized Collateral Network. They transformed shares from one of their money market funds into digital tokens and handed them over to Barclays as collateral for a derivatives trade.
JPMorgan’s blockchain network, Onyx, allowed for almost instantaneous collateral movement, which is much faster than traditional methods that take a day or more. This technology, at scale, would free up capital for more transactions, making the process more efficient.
Clients can use various assets, like stocks and fixed income, as collateral with the Tokenized Collateral Network. JPMorgan initially tested TCN in May with an internal transaction.
Tokenizing money market fund shares for collateral in clearing and margining transactions can greatly ease the challenges of meeting margin calls during market stress, according to Tom McGrath, a BlackRock executive.
JPMorgan Broadens Expertise in Blockchain Applications
JPMorgan’s Onyx division is collaborating with various banks and central banks to simplify international transactions and make blockchain-based systems and digital assets more accessible for everyday use.
In June, JPMorgan Chase & Co. took a significant step towards incorporating blockchain technology into traditional banking. They introduced euro-based payments for their corporate clients, using their own digital currency, the JPM Coin.
Additionally, the company is testing a blockchain-based application for repurchase agreements (repos) and researching a digital deposit token to speed up international settlements.
Important: Please note that this article is only meant to provide information and should not be taken as legal, tax, investment, financial, or any other type of advice.
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