Oversea-Chinese Banking Corporation (OCBC) has become the first Singapore bank to have intraday institutional lending capabilities. The move will enable the bank to deploy and maximise returns from its excess intraday liquidity, said OCBC in its Oct 30 statement.
This will be done through reverse repurchase transactions on JP Morgan’s digital financing application, built on the Onyx digital assets platform. OCBC will lend cash to JP Morgan and accept tokenised securities as collateral. These transactions can be completed almost instantly, compared to the one business day wait in the traditional repurchase transactions market due to manual processes.
OCBC conducted its first reverse repurchase transaction on JP Morgan’s digital financing application on Oct 11. At maturity, which took less than 2 hours, the principal cash amount was returned to OCBC with interest and the bank released the tokenised securities back to JP Morgan.
In its release, OCBC said it also conducted a separate intraday repurchase transaction as a cash borrower.
Both transactions were denominated in US dollars, although transactions can also be denominated in Euros.
“Collaborating with JP Morgan’s Digital Financing for intraday repo provides OCBC with a powerful tool for intraday borrowing and lending of cash by harnessing blockchain technology. This improves our liquidity management resilience and allows us to put excess intraday liquidity to work,” says Kenneth Lai, head of global markets at OCBC.
See also: MAS announces plans to advance tokenisation in financial services
“I envision that markets will only get more competitive and sophisticated, so the ability to optimise 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 JP Morgan on our joint digital agendas,” he adds.
Shares in OCBC closed 24 cents lower or 1.56% down at $15.19 on Oct 30.
