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Pierre Batrouni, managing director at MJX Asset Management

BNY Mellon, a global leader in investment management and investment services, became one of the first institutions in the U.S. to introduce DTCC’s Cash on Transfer to its clients in the syndicated loan market. Cash on Transfer provides for the simultaneous transfer of a client’s cash and loan assets on the agreed settlement date.

Cash on Transfer is the first delivery-versus-payment (DVP) platform for secondary loan trading. BNY Mellon is one of five institutions that participated in a pilot program for the service, which was developed by DTCC and Markit, and the first company to facilitate a trade to settlement using the platform.

Managing risk

The new service delivers bottom-line benefits to clients by helping them more effectively manage risk around cash transfer and reducing both the administration and fee costs associated with multiple transactions. Loan/SERV Cash on Transfer supports U.S. dollar trades and is expected to expand over the next year to support cash settlement in 50 currencies.

MJX Asset Management, a New York-based specialized asset management company with experience investing in the leveraged loan market, was the first BNY Mellon client to settle a trade using the new platform.

“We believe this service will significantly decrease settlement time and make the loan closing process even more efficient,” said Pierre Batrouni, managing director at MJX Asset Management. “We are delighted to have participated in piloting this innovation that brings much-needed change to the industry.”

Boosting efficiencies

“Improvements in transparency, efficiency and risk reduction are integral to the continued growth of the loan syndication market, and the new service should increase the efficiency of trading and settlement of this asset class,” said Jocelyn Lynch, managing director of structured products at BNY Mellon Corporate Trust. “We will continue to work with key partners to help modernize the syndicated loan market and bring the industry closer to a straight-through processing model.”

“By paying one netted figure, rather than multiple counterparties, Cash on Transfer simplifies the settlement process, reduces fees involved with multiple payments and boosts a company’s overall capital efficiency and cash utilization,” said Mathew Keshav Lewis, DTCC vice president, Global Loans Product Management. “Given that large lenders may be settling significant trade volume each day, this streamlines the process and represents substantial savings.”

BNY Mellon Corporate Trust services $11.8 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. @