Blockchain Advances in Syndicated Loans
A blockchain-based syndicated loan utility is one step closer to production as Synaps Loans demonstrated its proof-of-concept in R3 Labs and Research Center.
The demonstration consisted of 15 of the 19 participating financial firms entering ‘dummy’ data to originate and settle a loan at issuance and then to trade and make payments on those loans, according to Caitlin Long, president and chairman of Symbiont.
Distributed ledger vendor Symbiont and syndicated load software provider Ipreo own and develop Synaps’ platform in a 50-50 partnership.
“In plain English terms, they have the front end, and we have the back end of the system, and we integrated with each other’s systems,” Long told Markets Media.
Synaps still has some testing to do on its platform, but the majority of its functionality already is present, Emmanuel Aidoo, head of the distributed ledger and blockchain effort at Credit Suisse, said in a statement.
Adding the remaining functionality is not expected to be a heavy lift, said Long.
“We are pretty close to being production-ready,” she added. “Getting from a production-ready platform to actual production does take quite a bit of time given the rigorous testing standards that the banks impose on new technology, which is a standard process.”
One participating bank has already begun a security audit of the platform to ensure that it meets the requirements of the firm’s chief information security officer.
Since the platform is still at the proof-of-concept state, it is too early to introduce the platform for a regulatory compliance review, Long noted.
“We know that some banks involved their legal and compliance people in the demo,” she added. “It really was bank specific process when they look at new technology and decide when to bring in other parts of the firm.”
After Synaps completes is CISO audit, there is more testing with the 19 firms, and additional system integration work to do.
One unnamed bank plans to issue syndicated loans plans to begin issuing syndicated loans on the platform as early as the first quarter of 2018, according to press reports.
Regarding possible market coverage the platform would have once it was in production, it could be sizable, said Long. “The project includes three of the top five agent banks in syndicated loans,” she said. “On the buy side, it includes the largest asset manager and largest hedge fund that invest in the sector.”
Real-time settlement is the key benefit of blockchain-based processes.
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The shared private ledger from Baton Systems enhances settlement speed and efficiency.
Customers can have accelerated treatment of financial transactions, exchange and storage of data.
Project Jura explored cross-border settlement of tokenised assets on a DLT platform.