DTCC Connection

May 02, 2011 • DTCC Connection

Loan/SERV Automates Loan Reconciliation for BNY Mellon

BNY Mellon Corporate Trust, a leader in the global syndicated loan market, has linked to DTCC’s Loan/SERV Reconciliation Service to enable its clients to reconcile their loan positions on a daily basis with agent banks around the globe.


BNY Mellon is one of the first trustee and collateral administrators to partner with DTCC in introducing a data reconciliation service for clients.


DTCC developed the Loan/SERV Reconciliation Service to help clients improve their position recordkeeping by allowing them to more easily compare their own data with an agent’s position. By having the data from all parties on a single platform, clients are able to reconcile the details of a loan on an automated basis daily and identify and resolve differences in positions in a timely manner.


Serving fund managers

As a trustee and collateral administrator, BNY Mellon serves the lenders – typically fund managers – and provides regular updates to investors by validating actual recording of loan data, managing cash flow and providing various reporting and accounting services. BNY Mellon services $11.9 trillion in outstanding debt from 61 locations in 20 countries. Its clients include governments and their agencies, multinational corporations, financial institutions and other entities that access the global debt capital markets.


Debra Baker, head of structured finance at BNY Mellon Corporate Trust

Syndicated loans involve multiple lenders for each borrower. Agent banks administer the loans and act as the liaison, transmitting information among the parties. Prior to the launch of Loan/ SERV, the reconciliation process was essentially manual and resulted in thousand of faxes going out into the market each month. Loan/SERV automates the process and enables lenders and their trustees/custodians to view and reconcile loans on a position basis, or at a more detailed level ranging from the commitment and transaction level down to the individual contracts, drawings and fees with all relevant transaction details.


Reducing risk

“We believe that the improvements in transparency, efficiency and risk reduction achieved through increased automation are integral to transforming the loan syndication market, and we developed our data reconciliation service to try to bring the industry closer to a straight-through processing model,” said Debra Baker, head of structured finance at BNY Mellon Corporate Trust.


MJX Asset Management, a New York-based specialized asset management company with experience in investing in the leveraged loan market, is the first BNY Mellon client to go live with the new data reconciliation service.


“We believe this end-to-end service will significantly reduce our administrative burden and increase the accuracy of a very important but usually labor-intensive process that is crucial to effective risk management,” said Pierre Batrouni, managing director at MJX Asset Management. “We are delighted to have participated in piloting this innovation with BNY Mellon that brings muchneeded change to the industry.”


Global customers

Mathew Keshav Lewis, DTCC vice president, Global Loan Product Management, said DTCC is “pleased to partner with BNY Mellon to bring Loan/ SERV Reconciliation to its broad global customer base. BNY Mellon is committed to providing its clients with the most accurate information available on their loan positions and transactions, and is taking full advantage of data now available within Loan/SERV to streamline the administration process.”


Lewis said the Reconciliation Service now serves more than 2,900 banks and loan investors in more than 45 countries across North America, Latin America, Europe, Asia and Africa.


BNY Mellon also utilizes Loan/SERV Reconciliation as a global agent bank for the syndicated loan market. Other agent banks are Barclays Capital, Citi, Credit Suisse, Deutsche Bank, Goldman Sachs, J.P. Morgan, the Royal Bank of Scotland and Wells Fargo Bank.


Loan/SERV is a service offering of DTCC Loan/SERV LLC, a subsidiary of DTCC. @


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