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Fidelity International Joins J.P. Morgan's Tokenized Collateral Network

Fidelity is seeking to enhance the efficiency and stability of using money market fund shares as collateral through blockchain technology.


Fidelity is seeking to enhance the efficiency and stability of using money market fund shares as collateral through blockchain technology.
Credit: Foretoken Media

Fidelity International, a global leader in investment management services, has officially joined J.P. Morgan’s Tokenized Collateral Network (TCN). This collaboration marks a significant milestone in the financial technology landscape, leveraging blockchain to enhance the utility of digital assets in collateral management.


Tokenization on J.P. Morgan’s Onyx Digital Assets


TCN, a key component of J.P. Morgan’s Onyx Digital Assets platform, operates as a private blockchain network. It facilitates the movement of tokenized assets, including the crucial process of collateral settlement. Fidelity International has taken a groundbreaking step by tokenizing shares of its money market funds (MMF), making them available for collateral use through TCN.


This innovative move allows Fidelity International to post MMF shares directly as collateral without the need to convert them into cash first, potentially enhancing efficiency and stability during market volatility.


Benefits of Tokenization in Collateral Management


The tokenization of MMF shares and other financial assets offers several benefits. According to Stephen Whyman, head of Debt Capital Markets at Fidelity International,


"Tokenizing our money market fund shares to use as collateral is an important and natural first step in scaling our adoption of this technology."

He highlights the improved efficiency in meeting margin requirements and the reduction in transaction costs and operational risks as clear advantages for clients and the broader financial system.


Expansion and Future Prospects


TCN began with the tokenization of money market shares but plans to expand into equities, fixed income, and various asset classes. J.P. Morgan emphasizes the transformative potential of TCN, noting that the ability to tokenize assets and utilize them in diverse transaction structures can revolutionize collateral markets. Harpreet Bains, managing director and head of trading services digital at J.P. Morgan, stated,


"Growing the number of participants on TCN was a key objective from the outset, and we’re delighted to welcome Fidelity International to the network."

The partnership between Fidelity International and J.P. Morgan’s Tokenized Collateral Network represents a forward-thinking approach to financial services, where technology and innovation meet to create more efficient and robust markets. The expansion of TCN will likely usher in a new era of opportunities for using digital assets as collateral across the financial industry.

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