Major global investment bank JPMorgan has developed a new blockchain-based solution for derivatives designed to speed up cash and collateral transfers. The tool was developed in partnership with California-based fintech firm Baton Systems and aims to enable the real-time movement of transfers to multiple clearinghouses, the firm announced Nov. 14.
The current process requires collateral custodians to manually coordinate multiple systems and reports. Integrated with JPMorgan’s proprietary automation system, the new solution reportedly eliminates manual intervention in the collateral process and therefore expedites the collateral workflow.
According to the announcement, the platform automates margining and collateral flows and allows users to see the flow of assets between JPMorgan and the participatory clearinghouses.
The announcement does not specify whether the solution is based on JPMorgan’s Quorum blockchain platform.
The new platform purportedly reduces the time needed from hours to real-time
Anthony Fraser, head of global clearing operations and trading cost management at JPMorgan, noted that the technology reduced the time needed for collateral processes from hours to near real-time. He added that the system has already led to faster payments as well as more efficient reporting for all parties in the collateral lifecycle.
Blockchain technology has previously been used in collateral transfers. In June 2019, major stock exchange operator Nasdaq successfully piloted a blockchain-based proof-of-concept (PoC) providing a 24/7 securities collateral solution. The PoC reportedly enabled parties to handle the margin call, the securities collateral delivery and the return process within minutes.