17 October 2017
Register now

Banks drive ahead with blockchain project for syndicated loans market

31 March 2017  |  16809 views  |  0 Go!

Vendor Synaps Loans and a group of banks working under the R3 blockchain banner, say they have made big progress in an initiative to apply distributed ledger technology to an overhaul of the antiquated and costly manual intervention in the $3 trillion global syndicated loans market.

Synaps Loans - a joint venture created last year through a partnership between smart contract vendor Symbiont and loan settlement platform provider Ipreo - worked with Credit Suisse and a host of agent banks service providers, and fund managers to carry out a "successful demonstration" of the working blockchain system for syndicated loan servicing.

Settlement periods of 20 business days or more threaten the continued growth of the loan market. Syndicated loans have a record unsettled exposure of more than $70 billion, over twice that of high-yield bonds. For the sell-side, the delays tie up precious capital. For the buy-side, settlement uncertainty confounds cash management and necessitates costly credit lines.

Synaps says that it gives loan investors direct access to an authoritative system of record for syndicated loan data. This yields immediate savings by reducing manual reviews, data re-entry and systems reconciliation. In the future, loan data processing can be done exclusively on the distributed ledger, the firm believes, eliminating the cost for each market participant to maintain its own separate lending system.

"Synaps now has the majority of the functionality needed to implement blockchain technology at scale in the syndicated loan market, which enables us to move into the final stages of development," says Emmanuel Aidoo, head, distributed ledger and blockchain effort, Credit Suisse.

"Over the coming months we will work with Symbiont and Ipreo to implement the remaining functions to allow for distributed ledger technology to support a syndicated loan facility from origination to payoff, and work toward market adoption. The technical and market expertise that the project participants brought to the table means this solution will be tailor-made for use in live transactions."

Mark Smith, CEO, Symbiont, adds: "With this project we have proven that smart contracts can revolutionize the entire lifecycle of a loan, from creation to settlement in secondary trading. Fifteen different parties played roles in the final demo, executing bespoke and complex tasks on-platform. We look forward to working with these parties to deploy the technology in production."

Separately, the Hong Kong Monetary Authority (HKMA), Bank of China, Bank of East Asia, Hang Seng Bank, HSBC, Standard Chartered Bank, and Deloitte have carried out a proof-of-concept using a distributed ledger platform for trade finance.

"This proof of concept has demonstrated the application of DLT in digitising paper-intensive processes through smart contracts, reducing the risk of fraudulent trade and duplicate financing, and improving the transparency and new product innovation of the industry as a whole," say the partners.

A second phase of the project will see Standard Chartered invite clients to take part in a pilot.

Comments: (0)

Comment on this story (membership required)

Finextra news in your inbox

For Finextra's free daily newsletter, breaking news flashes and weekly jobs board: sign up now

Related stories

IBM, Natixis and Trafigura team on blockchain platform for oil trades

IBM, Natixis and Trafigura team on blockchain platform for oil trades

28 March 2017  |  15774 views  |  0 comments | 12 tweets | 16 linkedin
G20 urged to set up central bank blockchain consortium

G20 urged to set up central bank blockchain consortium

20 March 2017  |  10651 views  |  0 comments | 19 tweets | 21 linkedin
Credit Suisse drives blockchain project in syndicated loans market

Credit Suisse drives blockchain project in syndicated loans market

28 September 2016  |  12175 views  |  0 comments | 19 tweets | 18 linkedin
Niederauer backs 'smart securities' startup Symbiont

Niederauer backs 'smart securities' startup Symbiont

09 June 2015  |  6141 views  |  0 comments | 4 tweets | 12 linkedin

Related company news

 

Related company information

Credit Suisse

Related blogs

Create a blog about this story (membership required)
visit www.temenos.comvisit www.innotribe.comvisit www.vasco.com

Top topics

Most viewed Most shared
Ripple looks to drive bank adoption with $300m XRP rebate programmeRipple looks to drive bank adoption with $...
14371 views comments | 11 tweets | 3 linkedin
Taiwan's Far Eastern International Bank suffers malware attackTaiwan's Far Eastern International Bank su...
13035 views comments | 16 tweets | 22 linkedin
Monzo fends off suitors as current account upgrade beginsMonzo fends off suitors as current account...
8945 views comments | 17 tweets | 14 linkedin
Swift positive on blockchain, but big challenges remainSwift positive on blockchain, but big chal...
7866 views comments | 15 tweets | 20 linkedin
Ripple blockchain network hits 100-member markRipple blockchain network hits 100-member...
7584 views comments | 13 tweets | 13 linkedin

Featured job

Competitive base, double ote, benefits
London, UK

Find your next job