JPMorgan Automates Derivatives Margin Payments With DLT Firm

Major global investment bank JPMorgan has developed a new solution for derivatives designed to speed up cash and collateral transfers. The tool was developed in partnership with California-based fintech firm Baton Systems and aims to enable the real-time movement of transfers to multiple clearinghouses, the firm announced Nov. 14.

The current process requires collateral custodians to manually coordinate multiple systems and reports. Integrated with JPMorgan’s proprietary automation system, the new solution reportedly eliminates manual intervention in the collateral process and therefore expedites the collateral workflow. 

According to the announcement, the platform automates margining and collateral flows and allows users to see the flow of assets between JPMorgan and the participatory clearinghouses.

Platform does not use JPMorgan’s Quorum blockchain platform

Following a press inquiry from Cointelegraph, a spokesperson at JPMorgan clarified that the platform did not involve Quorum as it’s not a formal blockchain or distributed ledger. “It makes workflow transparent to both sides so it’s blockchain-like,” the representative elaborated.

The new platform purportedly reduces the time needed from hours to real-time

Anthony Fraser, head of global clearing operations and trading cost management at JPMorgan, noted that the technology reduced the time needed for collateral processes from hours to near real-time. He added that the system has already led to faster payments as well as more efficient reporting for all parties in the collateral lifecycle.

Blockchain technology has previously been used in collateral transfers. In June 2019, major stock exchange operator Nasdaq successfully piloted a blockchain-based proof-of-concept (PoC) providing a 24/7 securities collateral solution. The PoC reportedly enabled parties to handle the margin call, the securities collateral delivery and the return process within minutes.

Disclaimer: This article was updated to specify that the solution is not blockchain-based and did not involve JPMorgan’s Quorum blockchain.