by Edward C. Kelleher
DTCC’s Loan/SERV Reconciliation Service now links eight leading global agent banks to more than 2,300 investment funds and bank lenders, representing more than half the global syndicated loan market in 37 countries across North America, Europe, Asia and Africa.
DTCC’s Loan/SERV is a suite of services that is helping to automate and streamline the processing of syndicated loans, reducing costs and mitigating risk in the loan market. DTCC introduced its Reconciliation Service in 2008, which enabled agent banks and lenders to view and reconcile loans at all levels, from commitment and transaction level down to the individual contracts and fees, with all of the relevant transaction detail.
Since the Reconciliation Service was launched, DTCC “has signed up more than 2,300 lenders in two years,” said Mathew Keshav Lewis, DTCC vice president, European Loans Product Management. “Together, these lenders represent approximately half the global syndicated loan market.”
Reconciliation and J.P Morgan
“As a leader in the global syndicated loan market, we’re committed to providing lenders with the most accurate and up-to-date information available on their loan positions,” said Karoline Kane, head of Global Loan Operations at J.P. Morgan. “Loan/SERV’s Reconciliation Service allows us to provide a higher level of service to our syndicate members and improves market-wide data accuracy.”
“One of the major benefits of DTCC’s Reconciliation Service is that it helps agents and lenders identify position and transaction discrepancies before they become larger problems,” Kane added. “This helps reduce re-work and other adjustments that become necessary when issues aren’t identified in a timely manner.”
In addition to J.P. Morgan, the global agent banks linked to the Reconciliation Service are The Bank of New York Mellon, Barclays Capital, Citi, Credit Suisse, Deutsche Bank, Goldman Sachs and The Royal Bank of Scotland.
“Both lenders and agent banks have been eagerly awaiting a solution that will automate and streamline the syndicated loan market,” said Pierre Batrouni, managing director, MJX Asset Management, LLC. “Now that Loan/SERV offers that solution and is continually adding to its capabilities, we see more market participants interested in using the service. This builds critical mass and further facilitates market expansion. And by linking to new trade settlement platforms, Loan/SERV will help reduce risk and loan settlement times,” he added.
In Europe, it can take more than 40 days for a loan to settle.
Some of the other leading investment firms linked to Loan/SERV include PIMCO, European Credit Management, Oak Hill Advisors, Highland Capital Management and KKR.
“The syndicated loan market has long needed the automated communication and processing capabilities that have helped other asset classes grow and expand globally,” said Lewis. “And the market has embraced Loan/SERV as the product to make this happen.”
In addition to servicing the U.S., Canada and the U.K., Loan/SERV continues to expand globally, helping to provide the exchange of information on syndicated loans in more than 20 countries, including Azerbaijan, Denmark, Finland, France, Germany, Hong Kong, Italy, Luxembourg, Mexico, the Netherlands, Nigeria, Russia, Spain, Sweden, Switzerland, Tunisia and Turkey.
Cash on Transfer
In early 2011, DTCC will begin piloting a cash settlement service called Cash on Transfer with a number of global loan agents, trading desks and administrators.
Cash on Transfer will give the global syndicated loan market a deliveryversus- payment platform that will ensure cash settles simultaneously with the change in legal ownership of the asset recorded by agent bank. It will handle cash settlement in more than 50 different currencies.
Loan/SERV is a service offering of DTCC Loan/SERV LLC, a subsidiary of DTCC.@