Goldman Sachs has completed its first repo trade, using the private blockchain network of JP Morgan. The trade involved a bond from the U.S. Treasury swapped for JPM Coin. The transaction took just over three hours to complete.
Mathew McDermott, head of digital assets for the global markets division of Goldman Sachs, said, “We see this as a pivotal moment for the digitization of transactional activity.”
Repos are otherwise known as repurchase agreements, and they are a kind of loan where financial firms sell securities that are collateralized in a contract only to purchase them back at a higher price in the future, usually occurring the next day. It allows banks to borrow money cheaply.
The development of blockchain in this arena is a huge asset to the repo market according to McDermott. He continued by explaining that, “We firmly think this will change the nature of the intraday marketplace.”