Happy Halloween (next week)! For this last Friday in October, we look at a bonafide real-world use case for blockchain on Wall Street. Also, we have a thoughtful approach to looking at governance and taking care of one of your institution’s most valuable assets.
1. JPMC Settle Asset Sales on Blockchain
In maybe an indication of, JPMorgan this month completed a collateral settlement on its own blockchain core between BlackRock and Barclays.
The main advantage claimed is instantaneous settlement. For higher trade volume platforms, this adds up to significantly less capital tied up waiting for trades to close throughout the day. Also sighted, although not quantified, is increased efficiency/cost savings and reduced risks of fraud (maybe, I guess, but the real-time element is what’s creating more hesitancy in the adoption of FedNow).
JPMorgan’s Tokenized Collateral Network, or TCN, was used by BlackRock Inc. to turn shares in one of its money market funds into digital tokens, which were then transferred to Barclays Plc as collateral for an over-the-counter derivatives trade between the two institutions,
“Money market funds play an important role in providing liquidity to investors in times of high market volatility,” Tom McGrath, deputy global chief operating officer of the cash management group at BlackRock said in a statement. “The tokenization of money market fund shares as collateral in clearing and margining transactions would dramatically reduce the operational friction in meeting margin calls when segments of the market face acute margin pressures.”
2. “Who has access to your data and where do you find it when you need it?”
Katie Robbert of Trust Insights has a great article breaking down a normally opaque and tough topic, data governance. While 1st party data is rapidly appreciating in value, governance is critical to enabling the enormous unlock for your institution and customers. Katie breaks down a usually boring technical topic into more practical approaches:
Part of your annual planning should be a data governance audit.
If you do nothing else to protect your data moving into 2024, make sure you know who owns it and who has access. Remove people that no longer work with it. Make sure the right people have ownership and level of access. Set up protocols for inevitable turn over. Create process for trialing and setting up new systems.
Also, Katies demonstrates how to leverage AI to answer seemingly unanswerable questions like how does language change when people are under duress?
And that’s it for this Friday. Hey, Michelle Williams has a new project out. Click below to let us know how we did: