DTCC launches global reconciliation Service for syndicated loan market

Source: Depository Trust & Clearing Corporation

The Depository Trust & Clearing Corporation (DTCC) today announced the launch of its Loan/Serv Reconciliation Service that will help automate and streamline the processing of syndicated commercial loans by enabling agent banks and lenders to view and reconcile loan positions on a daily basis.

The Reconciliation Service is global, the first of its kind and one of a suite of DTCC products under development that will make Loan/SERV a comprehensive, integrated solution for the loan market.

The service went into full production this week when Citi, a leading agent bank, began sending its loan data to DTCC. The data includes details of commitment balances for each lender in each facility as well as transactions that change those balances such as assignments or commitment reductions. The Reconciliation Service enables lenders to submit and reconcile their loan transaction and position records against those of the agent or view and download the agent information for their own processing.

"This is a giant step for the global syndicated loan market because it will help provide the loan industry with an industry-wide automated facility to reconcile balances daily", said Atilla Karasapan, managing director, Citi. "By making sure that both the agent and lender are on the same page, the service will help ensure accurate and timely servicing of loans."

"With the Loan/SERV Reconciliation Service, lenders submit transactions and position balances to DTCC," said Christopher Childs, DTCC vice president, Global Loans Product Management. "DTCC then compares the data against the agent submission and, via a Web interface, displays the differences online for both the agent and lender. The system allows agents and lenders to highlight the erroneous records and communicate with one another on a solution. System security means that lenders can only view records that relate to their loan transactions and positions."

For lenders who do not want the full reconciliation service, Loan/SERV offers position reporting where a lender can view the agent position records and transactions online and notify the agent whether they agree or disagree with the current position.
DTCC has been working with an advisory committee of five of leading global banks - The Bank of New York Mellon, Barclays Capital, Citi, Deutsche Bank and The Royal Bank of Scotland - in developing Loan/SERV.

"Together, these banks represent a significant share of the global syndicated loan market," said Childs. "Their support, expertise and input have been invaluable and they will continue to guide us as we introduce a comprehensive suite of services to automate this market.

"The DTCC is focused on providing a global solution that works in Europe, North American, Asia and other markets and our customer base's business represents this" said Childs.

DTCC has also formed a European consultation group with over a dozen participants from across the agent, custodian/trustee and buy-side communities, including amongst others Barclays Capital, Blue Bay, Cheyne Capital, Citi, CQS, Deutsche Bank, European Credit Management, and Royal Bank of Scotland to assist with the European development and deployment of Loan/SERV later in 2008.
"We look forward to testing and launching the European service in the fourth quarter, after consultation with the group. The benefits are significant and we've had overwhelming support from across the European loan community." said Mathew Keshav Lewis, DTCC vice president, Loan/SERV Europe.

Reconciliation is the first of two services that Loan/SERV will introduce this year. In the fourth quarter of 2008, Loan/SERV's Messaging Service will be launched, providing a safe, secure automated network for the transmission, receipt and online storage of industry standard loan messages.

The Messaging Service will bring standardized loan-servicing language to the marketplace by adopting FpMLTM (Financial products Markup Language), the e-commerce electronic language with widely-proven success in over-the-counter derivatives trading. (FpML is a trademark of the International Swaps and Derivatives Association.). The standardized messages are being developed by the industry through The Loan Syndications and Trading Association (LSTA) and The Loan Market Association (LMA). For maximum flexibility, Loan/SERV also allows users to view FpML messages via a web-based interface. The Loan/SERV Messaging service will allow for message routing, workflow management, processing and online storage.

Loan/SERV is a service offering of DTCC Solutions LLC, a wholly-owned subsidiary of DTCC.

Comments: (0)