OCBC announced that it is the first bank in Singapore to offer intraday institutional lending using blockchain technology.
This approach aims to maximise returns on excess liquidity through reverse repurchase agreements (reverse repos) conducted on J.P. Morgan’s Digital Financing application, powered by the Onyx Digital Assets platform.
OCBC is the first external counterparty with this reverse repo capability on the platform.
This system allows OCBC to lend cash to J.P. Morgan intraday, receiving tokenised securities as collateral.
By utilising blockchain technology, the exchange of cash and securities becomes near-instantaneous, a significant improvement over traditional repo markets where the process can take at least one business day.
OCBC reportedly completed its first reverse repo transaction on 11 October 2024, with a maturity of less than 120 minutes.
Furthermore, OCBC has also utilised the platform to borrow cash via an intraday repo, demonstrating the bank’s ability to effectively manage its liquidity needs through this new method.
Both the reverse repo and repo transactions were completed on 11 October 2024.
The two transactions were denominated in US dollars, although the platform also supports euro-denominated transactions.
Since its launch in 2020, J.P. Morgan’s Digital Financing application has facilitated over 1,200 intraday repo transactions exceeding US$1.5 trillion in value.
With growing interest in this technology for optimising liquidity, J.P. Morgan anticipates increased adoption of intraday lending and borrowing.
Kenneth Lai, Head of Global Markets at OCBC, said,
“Collaborating with J.P. Morgan’s Digital Financing for intraday repo provides OCBC with a powerful tool for intraday borrowing and lending of cash by harnessing blockchain technology. This improves our liquidity management resilience and allows us to put excess intraday liquidity to work.
I envision that markets will only get more competitive and sophisticated, so the ability to optimise liquidity on an intraday basis to maximise returns can be a game changer. We are excited to participate in and to explore other opportunities to collaborate with J.P. Morgan on our joint digital agendas.”
Scott Lucas, Head of Markets Distributed Ledger Technology at J.P. Morgan, said,
“We are pleased to collaborate with OCBC in demonstrating the ability and interest for lenders to participate in an intraday liquidity market.
We are looking forward to further growth in this type of transaction.”
