IHS Markit (Nasdaq: INFO), a world leader in critical information, analytics and solutions, today announced that its ClearPar service is delivering syndicated loan trade settlement and trade funding information directly to custody systems using electronic messaging.
The advance improves accuracy at custodians and reduces the risk of penalties that arise when buyers are late in making payments on loan trades.
J.P. Morgan Securities Services and BlackRock are the first two organizations to benefit from the new Custodian Services Messaging solution from ClearPar which delivers electronic messages covering notice of settlement date, settlement amounts and wire instructions to custodians and trustees.
“Our messaging solution for trade funding instructions brings another layer of automation to the trade process and demonstrates how we continue to deploy innovative technology to improve efficiency throughout the market,” said Sarah Wagner, managing director at IHS Markit. “We now offer system-to-system integration for the full scope of post-trade functions in the loan market, meaning that asset managers, other lenders, agents and custodians can automate how they process position data, lifecycle events, trade payments and other cash transfers.”
Under rules established by the Loan Syndication and Trading Association (LSTA), late payment by a buyer gives the seller the ability to claw back the interest that might have accrued on the trade prior to settlement. With electronic trade messaging, custodians receive immediate notice when trades settle and can process payments without manual intervention, avoiding potential delays that can result in loss of interest income due to late payment.
“This perfectly aligns with the strategy of J.P. Morgan Securities Services, which has been developing a single end to end data integration framework to break down traditional pain points in the post-trade lifecycle for buy side clients. Working with IHS Markit to further automate the bank loans settlement process for the increasingly crucial syndicated loans market is a major advancement” said Naveen TV, managing director at J.P. Morgan Securities Services. “Together, we are improving the client experience by creating a seamless and accurate settlement process, and completely eliminating manual tasks.”
“We are always looking to leverage technology to create scale, reduce risk, improve efficiency of our operations and, most importantly, create better outcomes for our clients”, said Sandra Stulberger, Bank Loan Operations director at BlackRock. “Our work with IHS Markit to streamline workflow in the syndicated loan market checks all of these boxes and will help foster the development of this market.”
The new integration supplements the suite of post-trade automation services ClearPar offers lenders, agents and custodians. Since the start of 2015, ClearPar has automatically transmitted closing documents in electronic format to custodians when trades settle, eliminating that step in the trade closing process for lenders.