Capital markets News

JP Morgan invests in blockchain collateral platform HQLAᵡ

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Today blockchain startup HQLAᵡ announced that JP Morgan has invested an undisclosed amount in its Series B extension. In January, Luxembourg-based HQLAᵡ disclosed a Series B funding round of €14.4 million ($17.5m) from BNY Mellon, Goldman Sachs, BNP Paribas Securities Services, Citigroup and Deutsche Börse Group.

The blockchain solution digitizes collateral sitting with a custodian using the HQLAᵡ digital collateral registry. By digitizing the process, settlement is significantly faster and doesn’t require the collateral to move from the original custodian. This enables banks to trade High Quality Liquid Assets (HQLA) with intraday settlement. It’s not an entirely decentralized process, with Deutsche Börse acting as a trusted third party between the custodians and the digital collateral registry. Money is saved by optimizing the collateral management process.

JP Morgan has been a Triparty Agent (custodian) connected to HQLAᵡ since the relatively early days. This year it also plans to connect its Agency Securities Lending business.

“J.P.Morgan’s strategic investment in our company and its commitment to connect to our platform speaks volumes towards validating our shared vision to accelerate collateral mobility across the global securities finance ecosystem,” said Guido Stroemer, Chairman and CEO of HQLAᵡ.

HQLAᵡ started as an incubator project at enterprise blockchain firm R3, and it uses the Corda blockchain. The Deutsche Börse provided multiple rounds of early funding, with ING investing in March 2020.

The company is one of several blockchain solutions looking to speed up post-trade settlement to enable intraday transactions. Another is Fnality backed by 15 financial institutions, aiming to provide the central bank-based digital currency to support settlement. And Finteum wants to enable intraday FX swaps.