Undoubtedly blockchain technology could be leveraged for financial services; cryptocurrencies are a clear example, now how traditional finance could look at it.
Banking giant JPMorgan is thinking about launching its tokenizing equities and other such traditional securities that would leverage blockchain technology. As per a new Bloomberg report, the financial services behemoth institute experiments with cutting-edge blockchain technology and uses it for collateral settlements transfer during the aftermarket.
JPMorgan represented the transfer of approximately $10 trillion on 20th May, to money market fund shares of asset management firm BlackRock as collateral on its private blockchain. The banking giant JPMorgan said that this effort allows investors to undertake a huge variety of assets that could act as collateral and use those assets outside the operating hours of the active market.
Primarily, a collateral settlement is where two parties exchange assets to reduce the risk associated with credit under unsecured financial transactions. Global head of trading services at JPMorgan, Ben Challice, said in an interview that after this move the financial institution has managed to move a collateral asset instantly without having trouble during the process. The bank said that it had achieved the process of frictionless transfer of such collateral assets that too in an instant.
Chalice also noted that Blackrock consistently explores how to use blockchain technology for asset collateralization, while the firm has no counterpart for the transaction process.
JPMorgan has its plans to increase its use of settlements of collateralized assets in upcoming months while incorporating these assets into derivatives, repo trading, and securities lending, along with expanding tokenized assets collaterals that include equities and fixed income. The bank earlier this week said that crypto assets are replacing real estate as it’s among the most preferred alternative asset classes.
Source: https://www.thecoinrepublic.com/2022/05/28/why-is-jpmorgan-looking-towards-blockchain-technology-for-its-banking-services/