Markit, a leading global financial information services company and The Depository Trust & Clearing Corporation (DTCC) today announced plans to bring together key services for the loan market in order to offer a comprehensive solution for the processing of syndicated loans.
The initiative aims to increase efficiency and help reduce counterparty and operational risk in the multi-trillion dollar syndicated loan market.
DTCC is expected to contribute its Loan/SERV Messaging Service to Markit's electronic loan settlement platform. The Loan/SERV Messaging Service is a safe, secure and automated network for the transmission, receipt and online storage of industry standard loan messages in FpML format. The combination of DTCC's electronic messaging and Markit's loan settlement platform will improve communication between buy-side and sell-side market participants significantly. In addition to contributing its Loan/SERV Messaging Service, the DTCC will connect the new Markit platform to other existing and future Loan/SERV products for loan reconciliation and cash settlement including Delivery versus Payment (DVP).
Markit's platform, which integrates parts of its WSO portfolio management software and services, will be enhanced further once Markit completes its acquisition of ClearPar, an automated syndicated loan operations platform, from FIS. The acquisition, which was agreed today, is expected to close by the end of this year. The Markit platform will also provide connectivity to Markit Document Exchange (MDE) and Markit Entity Identifiers (MEI) to ease the transfer of information such as reference entity data, administrative details and ancillary counterparty documentation.
Armins Rusis, Executive Vice President and Global Co-Head of Fixed Income at Markit, said: "The syndicated loan market is one of the largest credit asset classes and we have been working with the industry on a global settlement solution that will connect buy- and sell-side participants electronically for the first time. It is only by improving communication across the marketplace that we can speed loan settlement times and reduce operational risk to bring about a more transparent and liquid loan market."
"We're pleased that Markit and Markit and DTCC have come together to provide this solution to the loan market," said Michael C. Bodson, Executive Managing Director, Business Management and Strategy at DTCC. "The Loan/SERV Messaging Service will help eliminate faxes and associated back-office costs while greatly improving the reliability, timeliness and accuracy of syndicated loan communications. This service and future Loan/SERV products will help move the syndicated loan market closer to straight-through processing."
Andrew Gordon, Chief Executive Officer and President of Octagon Credit Investors, said: "Participants in the syndicated loan industry have long agreed on the need to move to electronic-based processing. In addition, here is a necessity in the industry to provide transparency in the closing and settlement process. The combined solution to be provided by Markit and DTCC is a positive step in that direction, as long the majority of the loan community adopts the solution."
The DTCC Loan/SERV Messaging Service is expected to be incorporated into the Markit loan settlement platform in the first half of 2010.