Fidelity International Tokenizes Money Market Fund on JPMorgan’s Private Blockchain
Fidelity International, a London-based fund management giant, has recently integrated JPMorgan’s Tokenized Collateral Network (TCN).
This integration marks a significant milestone as it tokenizes its own money market fund using JPMorgan’s private blockchain, Onyx Digital Assets which is based on Ethereum.
Advantages of Tokenization for Financial Markets
The tokenization of the money market fund by Fidelity International was done almost instantly thanks to the connectivity between the fund’s transfer agent, part of JPMorgan’s transfer agency services, and the TCN network.
This initiative aims to improve efficiency in margin requirements and reduce transaction costs and operational risks. Stephen Whyman, Head of Debt Capital Markets at Fidelity International, highlights the importance of this initiative in adopting a technology that brings clear benefits to clients and the global financial system.
History and Future Outlook of Tokenization
Fidelity’s participation in the TCN network allows it to integrate its money market fund shares through tokenization, adding a new asset that is otherwise prohibitive in today’s collateral landscape.
– Keerthi Moudgal, Product Lead at Onyx Digital Assets, JPMorgan
Tokenization of traditional financial assets has been a priority for banks, including JPMorgan, which has been working on the topic for several years. The essence of tokenization is to create a virtual investment vehicle on a blockchain that represents real assets such as real estate, precious metals, and collectibles.
Stocks and bonds are also involved. Fidelity International is not new to digital assets, having previously worked on a tokenization project with Swiss bank Sygnum in 2019.
In October of last year, JPMorgan conducted its first blockchain-based collateral settlement transaction involving tokenized stocks in a money market fund from BlackRock. These stocks were transferred to Barclays as collateral in an over-the-counter derivatives transaction. BlackRock has continued to adopt tokenization through its public project called BUIDL, partnering with tokenization services firm, Securitize.
JPMorgan’s TCN started with tokenizing money market fund shares, a type of mutual fund that invests in high-quality short-term debt instruments and cash equivalents.
The plan is to extend this practice to include stocks, fixed income securities, and a range of asset classes, says the bank.
