After six months of searching for a custom blockchain service from JPMorgan Chase for repo markets, Goldman Sachs has started trading on the platform.
According to Bloomberg, Matthew McDermott, global director of digital assets for Goldman Sachs’ global market arm, confirmed the first transaction on June 17 in an interview.
During the auction, Goldman Sachs traded a token copy of US government bonds for JPM Coin, JPMorgan’s dollar-denominated stablecoin. JPMorgan launched its own blockchain service to improve the efficiency of repurchase agreements last year. The platform uses JPM Coin to exchange digital US government bonds.
Goldman Sachs was one of the first financial institutions to notice the platform. Last year, McDermott mentioned the effectiveness of JPMorgan’s blockchain-based repo marketing service and said that “corporate blockchain can solve a real problem in the financial system.”
In a trillion dollar market, repo transactions or “repo agreements” are short-term lending agreements for government bond dealers. Overnight repo allows traders to sell government bonds to investors and buy them back the next day at a slightly higher price.
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McDermott described trading as a key moment for the digitization of transaction activity, as unlike the traditional repo market, the exact time of a transaction can be recorded thanks to blockchain technology.
Blockchain smart contracts allow the exchange of securities and cash simultaneously and instantly, and according to McDermott, this is a huge step forward for the repo market:
“We pay interest by the minute. We strongly believe that this will change the nature of the intraday market. ”
JPMorgan Chase first announced the launch of its stablecoin in early 2019, with a focus on international settlements for large corporations. The first transaction started in December and since then multinational corporations have been using JPM Coin for 24/7 payments.
The bank has created its own version of the Ethereum blockchain, Onyx, which now processes more than $1 billion in transactions every day.