DTCC to add cash settlement facility to automated syndicated loans platform
16 June 2009 | 3770 views | 0
The Depository Trust and Clearing Corporation is to add cash settlement, including delivery-versus-payment, to its Loan/Serv suite for the syndicated loans market.
Chris Childs, DTCC vice president, global loans product management says the addition of cash setlement will complement the company's existing Loan/Serv reconciliation and messaging services, which were introduced in 2008 to automate the trading and tracking of syndicated loans for both agent banks and lenders.
"Delivery versus payment will provide certainty to loan traders that cash settles simultaneously with changes to asset ownership recorded by the agent banks," he says.
A timetable for testing and production will be issued in the third quarter, he adds.
DTCC has been working with an advisory committee comprising representatives from the Bank of New York Mellon, Barclays Capital, Citi, Deutsche Bank, JPMorgan, and the Royal Bank of Scotland, to thrash out the details.
Eric Rosen, managing director at JPMorgan, welcomes the move: "This will be another giant step for the syndicated loan market, making the market more secure and helping ensure that settlement takes place, accurately and on time."
DTCC is competing with Euroclear to bring automation to the global syndicated loans market. The European depository has won the support of ten global banks for its multicurrency post-trade LoanReach service. Euroclear is promising to introduce DvP settlement for primary and secondary market loan trades, automated agent notices as well as collateral management services, by the end of the 2009.