Industry DisruptionLaunchedJ.P. Morgan Completes First Public Tokenized Trade For Client BlackRock
Milestone Date: October 11, 2023
J.P. Morgan has executed its first live blockchain-based collateral settlement transaction, which included participation from BlackRock and Barclays. “BlackRock and Barclays are now live on TCN, an application which sits on J.P. Morgan’s Onyx Digital Assets platform, operating as a private blockchain which is used for tokenized asset movements including collateral settlements,” J.P. Morgan said in a news release to PYMNTS.com.
According to CoinDesk’s coverage of the news, BlackRock used J.P. Morgan’s’s private Ethereum-based Onyx blockchain and the bank’s Tokenized Collateral Network (TCN) to tokenize shares in one of BlackRock’s money market funds. Once the shares were tokenized, the tokens were transferred to Barclays as security for an over-the-counter (OTC) derivatives trade between J.P. Morgan and BlackRock.
The tokenization process only took minutes to complete. This transaction—which involved money market fund (MMF) shares being used as collateral between bilateral derivatives counterparts—is a first for BlackRock, J.P. Morgan, and Barclays.
“The tokenization of 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,” said Tom McGrath, Deputy Global COO of the Cash Management Group at BlackRock.
Ed Bond, J.P. Morgan’s head of trading services shared, “This first transaction with BlackRock and Barclays demonstrates the power of tokenized assets, particularly in a collateral setting. MMFs can now be mobilized and utilized in a more efficient way, unlocking new pools of liquidity to be used for margining.”
By Elizabeth Morrison
Published:October 11, 2023