MUFG has launched a proof-of-concept (PoC) for on-chain Japanese government bond (JGB) repo transactions, following on the success of international initiatives.
Activity will take place on the Canton Network, which is operated by Digital Asset. Digital asset issuance and management platform Progmat, which holds a dominant market share in Japan, will also participate in the PoC.
The project will test on-chain simultaneous settlements of JGBs and digital money along with on-chain implementation of the complete repo transaction lifecycle.
MUFG highlights the success of overseas PoCs and project implementations that have brought secondary market transactions on-chain.
“In Europe and the United States in particular, PoC projects for intraday (starting and ending on the trading day) government bond repo transactions have rapidly expanded, and commercial services for intraday U.S. Treasury repo are already in operation,” it notes.
Repo has become a key use case for distributed ledger technology in the fixed income space, as proven by the success of Broadridge’s distributed ledger repo (DLR) platform.
READ MORE: Broadridge’s DLR grows at slower pace in April
MUFG believes that JGBs, which are widely used for collateral and repo transactions domestically and internationally, could see similar success, and expects that these projects will improve operational efficiency, funding and capital efficiency.
The firm declined to comment further on its work in this space.
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