JPMorgan, National Bank of Canada and others test blockchain debt issuance


NEW YORK (Reuters) – JPMorgan Chase & Co JPM.N trialled a new blockchain platform for issuing financial instruments with the National Bank of Canada and other major corporations, they said on Friday, seeking to streamline origination, settlement, interest rate payments interest and other processes.

FILE PHOTO: A sign outside the headquarters of JP Morgan Chase & Co in New York, U.S., September 19, 2013. REUTERS/Mike Segar/File Photo

Wednesday’s test mirrored the Canadian bank’s $150 million same-day offering of a one-year floating-rate Yankee certificate of deposit, they said in a statement. The platform was built over more than a year using Quorum, a type of open-source blockchain that JPMorgan developed in-house and is in discussions to release.

Participants in the experiment included Goldman Sachs Asset Management, the fund management arm of Goldman Sachs Group Inc. GS.NPfizer Inc. PFE.N and Legg Mason Inc. L M N Western Asset and other investors in the certificate of deposit.

Banks have poured millions of dollars into developing blockchain, the software originally created to run the bitcoin cryptocurrency, to streamline processes from cross-border payments to securities settlement.

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

JPMorgan is considering parting ways with Quorum because the technology has garnered significant outside interest, Umar Farooq, head of blockchain initiatives for JPMorgan’s corporate and investment banking, said in an interview.

He said it was taking too long to respond to requests for help from users from other companies.

Charging for support is not an option because software support is not the bank’s business, a person familiar with the matter said on condition of anonymity. The source was not authorized to publicly discuss the matter.

Discussions of the fallout are in their early stages, and the bank has attracted interest from financial institutions and big tech companies, Farooq added. He declined to name the companies.

JPMorgan plans to bolster the Quorum team with dozens of engineers from other divisions of the bank who have familiarized themselves with the technology, he said.

Blockchain is in the early stages of development in the financial industry, but JPMorgan is optimistic about its potential, Farooq said.

“We haven’t seen a lot of very large-scale things go into production yet. There are few instances where blockchain can really shine.

Reporting by Anna Irrera; Editing by Richard Chang


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