BlackRock leverages JPMorgan’s new blockchain tools for instant collateral settlement with Barclay’s BlackRock leverages JPMorgan’s new blockchain tools for instant collateral settlement with Barclay’s
JPMorgan has said the technology has the potential to enhance efficiency by unlocking capital for use as collateral in ongoing transactions.
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Updated: Oct. 11, 2023 at 3:58 pm UTC
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BlackRock used tokenized shares from one of its money market funds as collateral in a derivatives transaction with Barclays, leveraging JPMorgan’s newly introduced Tokenized Collateral Network (TCN), a blockchain-driven collateral settlement platform, per a Bloomberg report on Oct. 11.
Tyrone Lobban, the head of Onyx Digital Assets at JPMorgan, emphasized that the transactions were “instantaneous,” eliminating the delays associated with the traditional methods. He further noted that when this technology is deployed on a larger scale, it has the potential to enhance efficiency by unlocking capital for use as collateral in ongoing transactions.
According to the report, the bank plans to broaden its supported assets to include equities and fixed income. Ed Bond, the head of trading services at JPMorgan, reportedly said:
“Institutions on the network can use a wider scope of assets to meet any collateral requirements they have on the back of trading”
Bond further revealed that the bank has a pipeline of clients and transactions that would be testing its novel application.
Meanwhile, the BlackRock-Barclay transaction marks a unique occasion in which a bank-developed blockchain application is being brought to market, following years of scrutiny regarding the effectiveness of blockchain technology in the wider financial industry. Over the years, several traditional financial firms have made different forays into the emerging sector to different degrees of success.
Blockchain in banking
This BlackRock-Barclays transaction is part of a growing trend that has seen some traditional financial institutions become more open to implementing blockchain technology.
Last month, the London Stock Exchange (LSE) Group unveiled its groundbreaking blockchain-based trading platform for traditional financial assets. In this regard, the exchange a pioneer among major global stock markets.
Earlier this year, Swift, a prominent network for banking communications, disclosed a collaborative initiative with Chainlink (LINK) and other financial institutions. Their joint effort resulted in a successful tokenization experiment involving the seamless transfer of tokens across multiple blockchain networks.
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JPMorgan
JPMorgan Chase & Co is a global leader in financial services, offering solutions to the world’s most important corporations, governments, and institutions in more than 100 countries.
BlackRock
BlackRock, synonymous with global asset management, is an American multinational investment management corporation based in New York City.