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Industry roundup: 16 December

J.P. Morgan executes intraday repo transaction using blockchain

J.P. Morgan has announced it has completed a live, blockchain-based intraday repo transaction. The transaction was conducted between J.P. Morgan’s broker dealer and banking entity, using an in-house developed blockchain application which supported instantaneous settlement and maturity of the transaction in hours, as opposed to days.

The repo market provides a widely used form of secured financing, however, current operational limitations prevent the meaningful use of such financing to meet intraday liquidity needs. Using blockchain enables borrowers and lenders to execute shorter-term, intraday repo  transactions with real-time, simultaneous transaction settlement, creating new ways to access intraday liquidity. Both collateral and cash legs of the repo transaction were settled using blockchain, with the cash leg leveraging JPM Coin.

“The current repo market has some technical inefficiencies, and we identified blockchain technology as a way to reduce our clients’ intraday risk profile,” said Scott Lucas, head of Markets DLT at J.P. Morgan. “By deploying blockchain, we created new opportunities to streamline operational processes and accelerate settlement for repo. Our new solution will help unlock trapped pockets of liquidity for intraday use and allow for reduced risk profiles for our clients and J.P. Morgan.”

The offering will be made available in production to external counterparties in the US - some of which have already simulated transactions on the new application. J.P. Morgan developed the solution and tested its viability by conducting trades between two of its affiliates, alongside successful simulations of trades with Goldman Sachs and other entities, with BNY Mellon as the triparty agent.


Satago announces commercial funding pilot with Lloyds Bank

TruFin has announced that its subsidiary Satago Financial Solutions has entered into a commercial pilot with Lloyds Bank, whereby the bank will licence Satago's software platform for its customers seeking single invoice finance solutions. The commercial pilot is anticipated to run for up to six months and, if successful, is expected to lead to a five-year commercial agreement.

As part of the commercial pilot and any subsequent commercial agreement, Lloyds Bank will be extending financing to its customer base utilising Satago's digital cash flow management and invoice financing platform. Satago will be paid a recurring fee for each customer of the bank that utilises Satago's platform. Should the pilot develop into a five-year commercial agreement with Lloyds Bank, this is expected to have a materially positive impact on the financial expectations of Satago and, as a result, the company.

"I am delighted to partner with Satago in order to rapidly launch a best-in-class digital working capital solution for our clients," commented Ben Stephenson, MD and head of Invoice Finance & ABL at Lloyds Bank. "The proposition will help deliver critical funding and digital tools to small businesses in the UK to help them navigate the challenging external environment."


Contis joins forces with Mastercard in Europe

European payments fintech Contis has announced a partnership with Mastercard as a principal issuing member. Through this partnership, Contis delivers an end-to-end banking-as-a-service (BaaS) platform including direct access to both of the world’s leading global payments networks, accepted by millions of merchants worldwide.

The addition of Mastercard represents another step in Contis Group’s growth as a global issuer and card processor. Throughout 2020, Contis has reached a number of milestones in its planned expansion, including securing full Brexit readiness by moving its entire EEA client-base to its European entity and migrating a million customers to new cloud-native data centres in London and Amsterdam. The fintech has also added functionality to the platform including open banking, international currency conversion, cardless cash delivery and request to pay capabilities which, when linked to its UK and SEPA payment accounts, delivers the BaaS solution. 

This partnership should enable Contis to bring greater choice to the market and supplement the range of products and services offered in key commercial verticals including banking, fintech, insurance and corporate remittance. Platform integration work is starting immediately, with expected go-live on the Mastercard network by Q2 2021.

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