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JP Morgan trialling blockchain-based technology in trading systems


Companies are rushing to find a use for blockchain

JP Morgan is conducting a trial which sees its trading systems supplemented with distributed ledger technology.

In a collaboration with blockchain start-up Digital Asset Holdings – headed up by the bank’s former head of commodities Blythe Masters – will be implementing blockchain in a number of applications.

One of these applications will see blockchain used to address liquidity mismatches in JP Morgan’s loan funds.

‘Settlement can take weeks,’ says Daniel Pinto, head of JP Morgan’s investment banking division. Investigating the use of blockchain, he adds, ‘makes all the sense in the world’ due to its ease of use and relatively quick processing speed.

Loans, according to Pinto, are a good place to start testing blockchain usage because ‘the settlement process is complex with lots of manual intervention and multiple parties’.

JP Morgan was part of a group of firms which invested more than $50 million in Digital Asset Holdings.

Goldman Sachs, according to a report from the Financial Times, is another prominent name set to add its support to the start-up.

Masters, CEO of Digital Asset Holdings, has described reducing the costs and increasing the efficiency of financial transactions as ‘one of the greatest challenges of our time’.

In December last year it was rumoured that new Barclays CEO Jes Staley had offered Masters the opportunity to run the bank’s investment division. Reuters reported that Masters had declined the role, indicating her total commitment to Digital Asset Holdings.

Evolution and revolution

Bank of America has tried to get ahead of competitors in the blockchain game by buying up a load of patents related to it. Technology officer Catherine Bessant says it’s trying to avoid being an innovation ‘Neanderthal’.

Nasdaq announced its first blockchain-based transaction as a ‘revolution’, with a payment being successfully made through its newly-created distributed ledger platform, Linq.

Meanwhile, banks putting their blockchain eggs in one basket should consider the ramifications, according to Greg Medcraft, chair of the International Organization of Securities Commissions (IOSCO).

The watchdog has warned investors in the technology that they’ll still need to reassure customers that the blockchain process is secure and that transactions made on it are safe.

By Alex Hamilton

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