After six months of eyeing JPMorgan Chase’s custom blockchain service for repo markets, Goldman Sachs has started trading on the platform.
In the trade, Goldman Sachs swapped a tokenized version of a United States Treasury bond for JPM Coin, JPMorgan’s dollar-pegged stablecoin. JPMorgan started its private blockchain service to drive efficiency in repo agreements last year. The platform uses JPM Coin to swap digitized United States Treasury bonds.
Goldman Sachs was one of the first financial institutions to notice the platform. Last year, McDermott mentioned the efficiency of JPMorgan’s blockchain-based repo-market service, saying that “enterprise blockchain can address a real-world problem in the financial system.”
As a trillion-dollar market, repurchase or “repo” agreements are short-term lending arrangements for dealers in government bonds. An overnight repo allows dealers to sell government bonds to investors and repurchase them the next day at a slightly higher price.
Calling the trade a pivotal moment for the digitization of transactional activity, McDermott highlighted that, unlike the traditional repo market, the precise timing of the transaction could be logged thanks to blockchain technology.