Investment bank JPMorgan has completed an intraday REPO transaction using a blockchain-based application that will soon be launched for commercial use.
According to the statement, the REPO transaction was conducted between a broker-dealer of JPMorgan and the banking division of the organization. The application on the blockchain, which was developed by a special division of Onyx bank, supports the calculation and maturity of repo transactions in hours, not in days. The transaction also involved the JPM Coin stablecoin, which was first used for commercial payments in October. The blockchain was used for both the security and monetary components of the transaction.
The REPO market allows financial firms to trade large volumes of securities and borrow on favorable terms, which allows parties with cash to make a small profit. REPO transactions are similar to a short-term loan, where a trader sells an asset to another trader at a set price and commits to buy back the same asset or part of the asset at a different price in the future.
The application on the blockchain will soon be launched for commercial use and will be offered to external counterparties in the United States. Banks Goldman Sachs and BNY Mellon participated in trial transactions on the platform and will use the application in the future. Goldman Sachs ‘ head of digital assets, Mathew McDermott, said his institution “looks forward to launching the app in early 2021.”
BNY Mellon Clearance & Collateral Management CEO Brian Ruane said the bank will be “a critical partner for JPMorgan in providing much-needed collateral services to market participants looking to make intraday REPO transactions.”
Last year, Sberbank was the first in Russia to receive a patent for a system for automatic execution of repo transactions using the blockchain.