State Street has become the first third-party custodian to launch on JP Morgan’s Digital Debt Service. The integration will allow State Street to provide custody services for tokenised debt securities that are issued, settled, and serviced on blockchain. In a press release, the firm describes the move as a “milestone in the institutional adoption of blockchain-based debt securities”.
In addition, the integration also enables fully automated digital cash settlement that requires no manual intervention.
The solution saw State Street manage a digital wallet through the Digital Debt Service. The wallet maintained the depository record of the debt securities held by State Street on behalf of its clients. The Digital Debt Service facilitated the issuance, delivery-versus-payment settlement, and lifecycle management of the debt securities.
In the inaugural transaction, State Street Investment Management acted as the anchor investor in the purchase of a US$100 million commercial paper issued by the Overseas Chinese Banking Corporation (OCBC). JP Morgan Securities acted as placement agent.
For the future
State Street claims that the success of the transaction demonstrated Digital Debt Service’s ability to modernise short-term debt markets by enabling precision-timed settlement, with T+0 settlement available as an option. A streamlined lifecycle management with smart contracts means that payments, redemptions, and other corporate actions can all be handled automatically.
Donna Milrod, chief product officer at State Street believes that the launch has advanced the firm’s ability to deliver a fully integrate front-, middle-, and back-office solution built on blockchain technology, and laid the groundwork for interoperability across blockchain networks.
