Reuters and the Depository Trust Company (DTC) are to collaborate on the development of an Internet-based electronic settlement and clearing service for the $1.8 trillion syndicated commercial loan market.
Under the agreement, the two companies will tailor and then integrate DTC’s depository, custody and asset services with the Reuters eSettlement capability. The new services would aim to provide market participants with a common point of access and automate current processes dependent on paper and voice communications to create a seamless straight-through-processing (STP) environment. The introduction of such a system would help to cut settlement cycles and reduce global settlement risk, claim the partners.
Reuters and DTCC say they have consulted widely with industry participants to gather support for the initiative.
Mary Richards, Citigroup’s head of global markets operations comments: "We strongly support any initiative that can create more efficiency in the trading and clearing of bank loans. The Reuters and DTCC venture seems to make strides in that direction."
Donald Donahue, managing director, customer marketing and product development, at the Depository Trust and Clearing Corporation says: "For DTC, it would mean that we could clear, settle and provide automated processing capabilities to a new class of financial instrument that we haven’t handled before. We expect that such a capability would provide a very cost-effective improvement in service for our participants."