JPMorgan Debuts Tokenized Collateral Network In BlackRock-Barclays Trade

JPMorgan Chase & Co on Wednesday debuts the first blockchain-based collateral settlement for BlackRock. The largest US bank by assets used JPMorgan’s Tokenized Collateral Network (TCN) to convert shares in one of its money market funds into digital tokens. The tokens were then transferred to Barclays Plc as collateral for an over-the-counter derivatives trade between the two institutions.

BlackRock Successfully Completes Collateral Settlement Using JPMorgan Blockchain

BlackRock has successfully completed a collateral settlement trade with Barclays using JPMorgan’s Tokenized Collateral Network. The world’s largest asset manager turned shares in one of its money market funds into digital tokens and transferred it to Barclays as collateral for an over-the-counter derivatives trade between the two institutions.

Tokenized Collateral Network application by JPMorgan’s Onyx allows investors to utilize assets as collateral and transfer collateral ownership without moving assets. However, the Onyx blockchain network’s use is still small as compared to JPMorgan’s overall business. Despite Wall Street firms looking for ways to use blockchain technology, less number of of firms are actually agreeing to try blockchain for their operations.

Tyrone Lobban, head of Onyx Digital Assets at JPMorgan, said:

“Using the bank’s blockchain network Onyx Digital Assets, meant the collateral moved almost instantaneously, compared with over the course of a day. At scale, the technology would increase efficiency by freeing up locked capital so that it could be used as collateral in ongoing transactions.”

Ed Bond, head of trading services at JPMorgan, asserts that clients can use other assets such as equities and fixed income as collateral with the Tokenized Collateral Network. JPMorgan first tested TCN using an internal transaction in May.

The tokenization of money market fund shares as collateral in clearing and margining transactions would significantly reduce the challenges in meeting margin calls when segments of the market face acute margin pressures, said Tom McGrath, deputy global chief operating officer of the cash management group at Blackrock.

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JPMorgan Expands Expertise in Blockchain Applications

JPMorgan Onyx is also working with other banks and central banks to streamline cross-border transactions and retail applications of blockchain-based systems and digital assets.

In June, JPMorgan Chase & Co. step up efforts to integrate blockchain technology into traditional banking by introducing euro-based payments for corporate clients using its JPM Coin.

Moreover, the company operates a blockchain-based repo application, exploring a digital deposit token to accelerate cross-border settlements.

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