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The advent of the Onyx platform is one of the ways in which JPMorgan believes could help return back efficiencies in some aspects of the daily financing needs of its peers.
DBS Group Holdings Ltd (SGX: D05), the largest financial institution in Singapore has announced it has completed a trade financing deal using the Onyx blockchain protocol from JPMorgan Chase & Co (NYSE: JPM). As unveiled by the Singapore offshoot, it comes off as the first bank in Asia to utilize such financial products to boost its liquidity.
The Onyx platform was launched back in 2020 to enable financial institutions to access capital for short-term deals in fixed-income markets. The Onyx platform enables participants to borrow assets that they would have rather pulled out from their balance sheet, thus bolstering liquidity accessibility across the board.
Such trade deals for short-term transactions in the fixed-income market are dubbed the Repurchase market (Repo) and the assets being borrowed are often backed up by government bonds and thus serve as viable collateral for banks. Typically, conducting transactions in the Repo markets often takes a couple of days, but the Onyx platform has not just cut off the excess timing, it has also simplified the entire process of sourcing liquidity.
“Repurchase agreements or repos are a traditional and well-established method of raising financing, but infrastructural and technical inefficiencies meant the minimum term has usually been one day. In the past, banks around the world had to explore alternative routes for intraday financing requirements. Through leveraging efficiencies of a blockchain-based solution, we are able to raise USD funding in compressed timeframes which are beneficial to our liquidity needs,” said Andrew Ng, Head of Treasury and Markets at DBS.
The embrace of Onyx by DBS pushes has placed the banking giant on the pedestal as some of its core rivals including Goldman Sachs Group Inc (NYSE: GS) and BNP Paribas SA (EPA: BNP) amongst others. Since its inception, over $300 billion worth of transactions have been carried out on the Onyx platform.
Onyx Network: Designed to Boost Operational Efficiencies for DBS, Others
The operational activities of a banking firm can be immensely overwhelming. While the banking sector has continued to innovate, it has not removed the key headwind of time which in many cases often drags operations down.
The advent of the Onyx platform is one of the ways in which JPMorgan believes could help return back efficiencies in some aspects of the daily financing needs of its peers. Speaking on the collaboration with DBS, Scott Lucas, Head of Markets Distributed ledger Technology at JPMorgan said that the firms:
“Intraday repo solution helps clients boost operational efficiencies and accelerate settlement times for their repo activities. We are excited to have our first Asia-domiciled client live on the application, as the network continues to grow.”
While the Onyx network is itself a relatively younger innovation, the underlying blockchain technology is also in its infancy, as many new real-world solutions are being developed and introduced for the benefit of members of the public.