Consortium to Develop DLT-based Syndicated Lending Platform10.05.2017
Seven leading banks and Finastra are working together to create an online marketplace to drive transparency and efficiency in the syndicated loan market, according to vendor officials.
Underpinned by Corda, R3’s distributed ledger technology based platform, Fusion LenderComm exposes real-time credit agreement, accrual balances, position information and detailed transaction data to lenders, directly from agent bank loan servicing platforms such as Finastra’s Fusion Banking Loan IQ.
The move will slash the operational cost and burden of agent to lender administration and deliver self-service capabilities to lenders, providing accurate information on demand to optimize loan portfolios. BNP Paribas, BNY Mellon, HSBC, ING and State Street have joined the global community, with real-time data already exchanged between agents and lenders in the pilot phase.
“Fusion LenderComm has the potential to solve a problem whose solution has eluded the loan market since inception: distribution of loan information in a structured, timely, transparent manner that comes directly from the content creators – the agent banks,” said Robert Waddell, global lead of syndicated loan products at State Street. “As a consumer of large amounts of this information, the prospect of eliminating labor-intensive exercises, combined with the additional benefits of increasing efficiency, data accuracy and reducing operational risks, is not only very important for State Street, but all market participants and regulators as well.”
The Fusion LenderComm pilot phase enabled agent banks to publish loan data to the DLT platform, to extend these self-service capabilities to lenders. Through their own portal, agents can define and then publish lender-specific deal position data to Fusion LenderComm, so individual lenders can drill down into the data without needing to query positions on the phone or via email, as is typical today. Fusion LenderComm digitizes communication with lenders – driving efficiencies in the process, saving agents time and money, and eliminating operational risk.
The Fusion LenderComm platform is expected to launch next year. It promises an open utility for all banks involved in syndicated lending, including users of Finastra’s FusionBanking Loan IQ and other loan servicing software. The long term roadmap for the platform will transform the whole syndicated loan value chain, from bookrunning to delivering a marketplace for faster loan trading and settlement.
Blockchain-enabled platform reduces risk and operational costs and enhances liquidity for market participants.
The FX post-trade infrastructure provider has provided 50% in cost savings.
The new model addresses operation and maintenance of private permissioned blockchains.
Ethereum Foundation’s Aya Miyaguchi will help guide the body as it builds out its roadmap.
The asset class has not standardized and centralized post-trade infrastructure.