The first live blockchain-based collateral settlement transaction between JPMorgan and BlackRock and Barclays was completed on Wednesday, according to the massive American bank.
BlackRock tokenized shares in one of its money market funds using JPMorgan’s Ethereum-based Onyx blockchain and the bank’s Tokenized Collateral Network (TCN). After that, Barclays Plc received the tokens as collateral for an over-the-counter (OTC) derivatives trade.
Banks place a lot of importance on the tokenization of conventional financial assets, and JPMorgan has been at the forefront of this trend, with Citi and other players joining them.
According to a news statement from JPMorgan, tokenization happened in a couple of minutes thanks to connectivity between the fund’s Transfer Agent and TCN. According to the statement, the transfer between Blackrock and Barclays happened almost instantly and is a first for BlackRock, J.P. Morgan, and Barclays in which the shares of mutual fund mutual funds are used as collateral between bi-lateral counterparts in derivatives transactions.
The head of Onyx Digital Assets at JPMorgan, Tyrone Lobban, stated in a statement that “clients can already access intraday liquidity via repo transactions.” “With the introduction of TCN, clients can now post tokenized MMF shares as collateral, a quicker and more affordable method of satisfying margin requirements, and gain additional utility from their MMF investments.”
The Cash Management Group at BlackRock’s Deputy Global COO, Tom McGrath, continued, saying, “Tokenizing money market fund shares as collateral in clearing and margining transactions would dramatically reduce the operational friction in meeting margin calls when segments of the market face acute margin pressures.”