JPMorgan and National Bank of Canada tests blockchain tech for debt issuance purposes

JPMorgan’s blockchain platform was built using Quorum, a type of open-source blockchain that it has developed in-house and is looking to spin-off.

On Friday, JPMorgan Chase & Co disclosed, it has field tested tested a new blockchain platform for issuing financial instruments with the National Bank of Canada and other large firms. The platform is aimed at streamlining the origination, payment of interest, settlement, and other processes.

In a joint statement, JPMorgan and the National Bank of Canada said, on Wednesday they had run a test which mirrored the Canadian bank’s $150 million offering on the same day of a one-year floating-rate U.S. certificate of deposit.

The blockchain platform was built over more than a year using Quorum, a type of open-source blockchain that JPMorgan has developed in-house and is in discussions to spin off.

Other participants in the experiment included Goldman Sachs Asset Management, and Legg Mason Inc’s Western Asset and other investors.

Incidentally, financial institutions and banks have sunk in millions of dollars to develop blockchain, technology to streamline processes ranging from cross-border payments to securities settlement.

“Blockchain-related technologies have the potential to bring about major change in the financial services industry,” said David Furlong, senior vice president of artificial intelligence, venture capital and blockchain at National Bank of Canada, in a statement.

As per Umar Farooq, the head of the blockchain initiatives at JPMorgan’s corporate and investment bank, the bank is considering spinning off Quorum since it has attracted significant interest from many financial institutions.

As per a source who spoke on the condition of anonymity since he was not authorized to speak publicly on the matter, charging for assistance for Quorum is not an option since providing software support is not the bank’s business.

Discussions concerning the spin-off are in the early stages. JPMorgan has received interest from large technology companies and financial institutions, said Farooq while declining to name them.

The bank intends to increase the ranks of the Quorum team with dozens of engineers from its other divisions who have become familiar with the technology.

Although Blockchain technology is in the early stages of development in the financial industry, JPMorgan is optimistic about its potential.

“We haven’t really seen a lot of really large scale things go into production yet. There are few cases where blockchain can really shine,” said Farooq.


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