After launching its Tokenized Collateral Network (TCN) last year, today Onyx by JP Morgan revealed that Fidelity International has tokenized a money market fund on the network so it can be used as collateral, as first reported by Coindesk.
One of the most fertile areas for blockchain in institutional finance is anything that needs intraday settlement. Typically, collateral sits with a custodian, and it takes two days to transfer in Europe. However, collateral for trading, especially for derivatives, ideally needs to settle much faster to reduce risks. If it’s tokenized in a legally compliant manner, that transfer can be instantaneous.
Hence, last year BlackRock tokenized a money market fund on TCN, which Barclays used as collateral for a derivatives trade. TCN runs on JP Morgan’s private blockchain network.
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