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Goldman Sachs Conducts Its First Repo Trade via JPMorgan’s Private Blockchain

UTC by staff writer · 3 min read
Goldman Sachs Conducts Its First Repo Trade via JPMorgan’s Private Blockchain
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McDermott, who has spent fifteen years at Goldman Sachs, claims that the blockchain evolution was a massive bonus to the repo market, presently estimated at over $4.6 trillion.

Goldman Sachs Group Inc united with JPMorgan Chase & Co’s independent blockchain-based network for repo trades market that utilizes digitized currency to conduct cross-border payments.

One June the 17th, the American multinational investment bank conducted its first trade, when it exchanged a tokenized rendition of a US Treasury bond for JPM Coin, a permissioned and shared ledger system that allows clients to transfer US Dollars held on deposit with JPMorgan. Mathew McDermott, Goldman’s global head of digital assets, did not, however, disclose the price this exchange was valued at.

A repurchase agreement, also known as a repo trade, is a type of transitory borrowing from financial institutions in collateralized securities. In this process, a dealer trades securities to investors, generally only for a day, and purchases them the next day at a moderately inflated rate. The slight increase in the rate is the indirect overnight charge. This practice is highly advantageous to the banks, as this allows them to carry out an inexpensive exchange. The repo trades are precisely conducted to elevate temporary( or short-term) capital.

The repurchase agreements carried out in the blockchain-based network are different from the traditional repo trades. These transactions utilize smart contracts and a digitized version of the US dollar. Another dissimilarity is that the precise amount of time the banks took to finish the agreement is measurable. In Goldman Sachs’ first trade, it took a quarter more than three hours for the transaction to finish. 

In 2019, JPMorgan became the pioneer Multinational bank to curate a network that assists in the speedy remittances using Blockchain Technology. Through its private rendering of the Ethereum blockchain and unveiling of the JPM Coin, it allows the clients to enable business-to-business money movement round the clock. Onyx, JPMorgan’s Wholesale Payment Platform, has since gone on to trade more than $1 billion a day.  JPM Coin, on the other hand, expedites real-time value movement, assisting to decipher general issues of conventional international payments.

“We see this as a pivotal moment for the digitization of a transaction activity”, Mathew McDermott, head of Global digital assets reckoned.

McDermott, who has spent fifteen years at Goldman Sachs, claims that the blockchain evolution was a massive bonus to the repo market, presently estimated at over $4.6 trillion internationally. Due to the development of the market, repo trades operate with collateral as well as on cash, both of them being swapped immediately and all at once.

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