Euroclear and DTCC eye syndicated loans processing

Euroclear and DTCC eye syndicated loans processing

Euroclear has won the support of ten global banks to test a new multicurrency post-trade service for syndicated loan transactions, dubbed LoanReach.

The first phase of the new system went live in June, with the allocation of unique loan identification codes, creation of a centralised loan database and agent and lender portfolio reporting systems.

Institutions supporting the project include BNP Paribas, European Credit Management Limited, Société Générale, The Bank of New York Mellon and UBS Investment Bank. They have also volunteered to participate in a specialised working group, representing agents and lenders, created by the Loan Market Association (LMA).

James Maitland, managing director and EMEA corporate trust executive at The Bank of New York Mellon, comments: "This initiative provides an opportunity to increase efficiency and reduce risks and costs for market participants, leading to greater transparency and liquidity in the loan market."

The syndicated loan market has typically required a heavy manual and paper-based, back-office workload, leading to calls from regulators and market participants for the introduction of automated processes.

Olivier Grimonpont, director and head of product management for fixed-income securities and collateral Services at Euroclear, says: "The service we offer will be the most comprehensive available in the market, providing features such as automated reconciliation at facility and contract level, as well as DvP settlement."

The next phase of the project, beginning this month, will introduce a portfolio reconciliation service whereby lenders will also be able to upload information from their loan database, which will be reconciled with loan information provided by the agents. Towards the end of the year, an automated trade confirmation matching service and the lenders database will also be available to clients.

The final phase, completing the full launch of LoanReach, is scheduled for 2009 and will include DvP settlement for primary and secondary market loan trades, automated agent notices as well as collateral management services.

News of Euroclear's initiative coincides with the release by the US-based Depository Trust and Clearing Corporation of a new white paper outlining its own proposals for automating syndicated loans processing.

DTCC, working closely with an advisory committee of leading global banks including The Bank of New York Mellon, Barclays Capital, Citi, Deutsche Bank and The Royal Bank of Scotland, says it is developing a new system called Loan/SERV, with the first elements of the platform shipping later this year.

Christopher Childs, DTCC vice president, global loans product management, says that the first applications will include loan reconciliation services and a messaging platform for the transmission, receipt and online storage of industry standard loan messages.

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