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Bank of Montreal plans to offer tokenized cash services and deposits to institutional clients, allowing them to move money around more easily at any time.
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The Canadian bank is launching the service through the network of CME Group Inc., the largest United States derivatives exchange. “Clients will be able to move funds continuously when markets demand it, not when banking hours allow it,” Derek Vernon, the bank’s head of North American treasury and payment solutions, said in a statement Tuesday.
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Financial firms and exchanges are looking for ways to expand the hours in which they can trade and move assets. Tokenization, which creates digital representations of real-world assets on a blockchain, has been touted as a solution for the problem of moving trading and collateral around the clock.
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Tokenized cash is an institutional settlement service. BMO and CME plan to launch it in the second half of the year, pending regulatory approval. Once they do so, regulated financial firms and commercial banks that are clients of both the firms will be able to use the service to settle trading, margin calls and collateral 24 hours a day.
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Last year, CME began testing Google Cloud’s blockchain technology as it sought to improve market infrastructure amid the global shift toward all-day trading. The U.S. exchange is moving some of its markets to the cloud before the end of the year, according to chief executive Terry Duffy.
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With assistance from Katherine Doherty.
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