Singapore’s OCBC bank executed an intraday reverse repurchase (repo) transaction on JP Morgan’s Onyx Digital Assets platform, in which it lent money to JP Morgan, receiving tokenized securities in exchange. Less than four hours later, the transaction was unwound together with interest. JP Morgan said this was the first time an external counterparty had the ability to execute reverse repos.
It’s usually JP Morgan that does the cash lending to clients, taking tokenized securities in exchange. So far it has ten clients using the repo platform, which has conducted a cumulative $1.5 trillion in transactions since its launch in 2020.
OCBC also executed an intraday repo transaction as a cash borrower. While both transactions were in US dollars, the platform also supports euros.
The key benefit of blockchain for this use case is the ability to settle almost instantly, rather than one day settlement. Instant atomic settlement (delivery versus payment) enables several intraday use cases, including repo, FX swaps and the use of tokenized securities for intraday margin.
“This improves our liquidity management resilience and allows us to put excess intraday liquidity to work,” said Kenneth Lai, head of global markets at OCBC. “I envision that markets will only get more competitive and sophisticated, so the ability to optimise liquidity on an intraday basis to maximise returns can be a game changer. We are excited to participate in and to explore other opportunities to collaborate with J.P. Morgan on our joint digital agendas.”
Intraday repo
Euroclear’s triparty service enabled the tokenization of the securities used in the transactions. We assume it tokenized the securities directly onto the Onyx blockchain. However, Euroclear’s triparty service is also integrated with another solution, HQLAᵡ, which enables collateral mobility using different blockchain technology. JP Morgan is one of several institutional investors in HQLAᵡ.
In fact, HQLAᵡ is also planning to get involved in intraday repo, by enabling trades on the Eurex Repo F7 system to settle using a combination of HQLAᵡ tokenized collateral and Fnality tokenized cash.
