Trade Settlement Inc (TSI) today announced an industry breakthrough with the launch of the first and only fully automated settlement platform for the distressed loan market.
The new platform greatly streamlines the process of trading and settling distressed loans, creating substantial time and cost efficiencies for all market participants.
"We have put in place a tremendous opportunity for market participants to improve the efficiency of post-trade processing of distressed loans," said Pat Loret de Mola, President of TSI. "The industry wants and urgently needs an automated settlement platform to help achieve business and operational goals. The new automation for distressed loans does just that while providing greater transparency and better tracking of settlements. This will lead to quicker completion of trade processing and lower transaction costs. And, we believe, the automated platform will help drive the future, healthy growth of the market."
The new distressed platform, now accessible to all authorized TSI users at tradesettlement.com, substitutes automated functionality for the manual elements of the loan closing process and enables the sharing of information in a totally secure and efficient, web-based environment. It provides users and their agents with the ability to prepare and sign distressed transfer documents online, including trade confirms, assignment agreements, purchase and sale agreements, and purchase price letters. It also facilitates the management and tracking of loan inventories and related loan activity, providing an easier way to allocate trade inventory to open sales. Relevant data is streamed in and out of the platform through dynamic, real-time interfaces with certain back-office lending and portfolio management systems, eliminating double entry and maximizing the transparency of a trade's closing status. This comprehensive functionality fosters more accurate and timely cash and position reconciliations.
The innovative distressed loan platform comes at a time of tremendous growth and challenges for the market. With distressed loan volume climbing to $140 billion in 2009, a 250% increase from 2008, settlement times have not improved. Average settlement for distressed loans significantly lagged settlement for par trades over the last two years, according to industry statistics, a situation that can have significant negative consequences for market participants.
TSI's new distressed loan settlement platform has been piloted by several market participants over the past months. User feedback has been positive and prospects for use by both the buy and sell side institutions are strong.