The Depository Trust & Clearing Corporation (DTCC) announced today that J.P. Morgan, the largest global agent bank in the syndicated loan market, has joined a group of leading banks to support DTCC's Loan/SERV and will begin using the new suite of services to automate and streamline the processing of their syndicated commercial loans.
"This is an opportunity - for the very first time - to bring major new efficiencies and transparency to the syndicated loan market," said Eric Rosen, managing director at J.P. Morgan. "Loan/SERV will help solve many of the problems associated with the processing and tracking of syndicated loans, and we look forward to working with DTCC on this major undertaking."
"J.P. Morgan is one of the most significant global loan market players, and we're thrilled to have them on board with Loan/SERV," said Chris Childs, DTCC vice president, Global Loans Product Management. "Their support of Loan/SERV is invaluable and will help as we move forward in developing and introducing a broad range of automated and integrated services for both the primary and secondary markets of syndicated loans."
DTCC has been working with a group of global banks for support and guidance in the development and launch of Loan/SERV products on a global basis. These banks are The Bank of New York Mellon, Barclays Capital, Citi, Deutsche Bank and The Royal Bank of Scotland. With J.P. Morgan, these banks historically account for more than a third of the global syndicated loan market, according to Childs. DTCC also works with a European consultation group, which includes 12 European agent banks, five fund managers and three major custodian/trustees, to assist with the European development and deployment of Loan/SERV later in 2008.
"Our focus is on providing a global solution that works in Europe, North American, Asia and other markets. We need a global solution because our customers are global," says Childs.
DTCC launched the first of its Loan/SERV products - the Loan/SERV Reconciliation Service - in September 2008 with Citi when more than 6,600 lender of record positions were posted for reconciliation. This is the first service to automate the processing of syndicated commercial loans by enabling agent banks and lenders to view and reconcile loan positions on a daily basbasis.
A second service - DTCC's Loan/SERV Messaging Service - will provide a safe, secure and automated network for the transmission, receipt and online storage of industry standard loan messages, such as agent notices. The service, which will be launched later this year, brings 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. The service also allows market participants who do not wish to receive messages directly into their processing systems to manage their messages online via a message hub.