Yesterday Bloomberg reported that Goldman Sachs has joined JP Morgan’s Repo blockchain network. First unveiled in December, the Repo blockchain sits within JP Morgan’s Onyx division, home to multiple blockchain offerings. Goldman is the first bank to say it’s using the enterprise blockchain network, with BNY Mellon providing custody.
The initial transaction involved exchanging a US treasury bond for the JPM Coin, a tokenized form of money that sits in a JP Morgan bank account. Three hours and five minutes later, the reverse leg of the transaction happened. Instant settlement is the key differentiator, which enables intraday transactions and interest is paid by the minute.
“We see this as a pivotal moment for the digitization of transactional activity,” said Mathew McDermott, Goldman Sachs’s head of digital assets.
While JP Morgan’s platform is trading $1 billion a day, last week Broadridge announced its recently launched distributed ledger repo (DLR) platform processes $31 billion a day. This is still a tiny fraction of the market, which has daily balances outstanding of $4.5 trillion (including reverse repos) according to SIFMA. Broadridge’s conventional systems host 19 of the 24 primary repo dealers.
The Repo solution is not the only intraday blockchain with which Goldman is involved. McDermott is a big fan of HQLAᵡ, the blockchain platform that enables atomic settlement of collateral swaps and securities lending. It’s likely in part through his experience with that solution that McDermott landed the digital assets position at Goldman. JP Morgan is also a participant in HQLAᵡ and yesterday announced it invested in the solution.
