Blockchain is intended to break down silos, but in a multi-DLT world, the challenge is enabling different networks to interact to prevent new ones. HQLAX, JP Morgan, Ownera and Wematch simulated a cross chain delivery versus payment repo transaction. JP Morgan is an investor in all three of the other platforms.
The security was on the HQLAX ledger that uses the enterprise blockchain R3 Corda, and the cash used for settlement was JP Morgan’s, which uses the Quorum permissioned DLT.
With the trade logged on WeMatch, Ownera’s FINP2P routing solution connected the two ledgers for both the payment and securities leg and with Wematch for visibility.
Ledger Insights has written extensively about all three of the blockchain-related offerings.
HQLAX tokenizes securities at a particular custodian by creating digital collateral records. The Deutsche Börse acts as a trusted third party, confirming the underlying securities are locked at a custodian. This enables banks to quickly move around conventional securities, enabling intraday settlement by avoiding delays in transferring assets between custodians. JP Morgan, Goldman Sachs and BNY Mellon are amongst its numerous big name investors. And the triparty agents and custodians involved include Clearstream, Euroclear, JP Morgan, BNY Mellon, BNP Paribas and Citi.
It started by enabling banks to use delivery versus delivery to swap high quality liquid assets to ensure they comply with Basel III rules. More recently, it has been used for securities lending.
JP Morgan was one of the first major banks to tokenize bank money as JPM Coin. Companies like Siemens are already using it. It is also one of the joint venture participants in Singapore’s Partior, which is working on a multi-currency interbank payments network. The bank is also a first mover amongst institutions to take advantage of DeFi technology, such as automated market making to enable 24/7 FX transactions.
Ownera founded the open source FINP2P protocol, which interlinks various blockchains and conventional systems, including public blockchains. However, FINP2P itself is not blockchain-based. It’s a routing network. In September, JP Morgan participated in its $20 million funding round.
While FINP2P was one of the first to interconnect numerous institutional platforms at scale, SWIFT is also eyeing the blockchain interoperability opportunity. It recently completed a trial with SETL, Clearstream and Northern Trust. And it’s also exploring integrating with public blockchains through a proof of concept with Chainlink.