OCBC has become the first Singapore bank with intraday institutional lending capabilities as it seeks to maximize returns from its excess intraday liquidity.
This is done through reverse repurchase transactions (reverse repos) on J.P. Morgan’s Digital Financing application, built on the Onyx Digital Assets platform, where OCBC lends cash to J.P. Morgan and accepts tokenized securities as collateral, the bank explained in a media release on Wednesday.
Such transactions can be completed within the day as the exchange of cash and tokenized securities through the blockchain is nearly instantaneous. In contrast, the exchange of cash and collateral typically takes at least one business day in the traditional repo market due to manual processes.
Harnessing Blockchain Technology
«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,» Kenneth Lai, Head of Global Markets at OCBC said. «This improves our liquidity management resilience and allows us to put excess intraday liquidity to work,» he added.
While Digital Financing has previously facilitated intraday repurchase transactions (repos) where a J.P. Morgan counterparty borrows cash, OCBC is the first external counterparty with the ability to execute reverse repos.
A Game Changer
OCBC’s first reverse repo on Digital Financing was completed on 11 October 2024 with a maturity of less than 120 minutes. At maturity, the principal cash amount was returned to OCBC with interest, and OCBC released the tokenized securities back to J.P. Morgan.
«I envision that markets will only get more competitive and sophisticated, so the ability to optimize liquidity on an intraday basis to maximize 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,» Lai added.
