DTCC and Clearstream Offer Loan Service09.19.2011
Partnership will enable banks to use loan portfolios as collateral in interbank transactions.
Depository Trust & Clearing Corp. (DTCC) and Clearstream have launched a co-branding and product integration deal for bilateral and syndicated loans.
Clearstream will co-brand DTCC’s Loan/SERV Reconciliation Service and begin to offer it in 2012. It will also develop bilateral loan services, built on DTCC’s existing Loan/SERV platform and integrated with Clearstream’s collateral management platform.
“Clearstream will distribute a co-branded service with DTCC to existing and prospective clients in Europe, the Middle East, Africa and Asia,” Fabrice Tomenko, head of collateral management for global securities financing at Clearstream, told Markets Media. “The service will be provided by DTCC on behalf of Clearstream.”
DTCC’s Loan/SERV enables agent banks and lenders to reconcile — on a daily basis — loans at all levels, from commitment and transaction level down to the individual contracts and fees, with all of the relevant transaction detail positions, Lewis said.
Syndicated loans involve multiple lenders for each borrower, with agent banks acting as the liaison, transmitting information between parties.
Loan/SERV automates the process and enables agent banks and lenders to view and reconcile loans on a position basis, or at a more detailed level down to the individual contracts.
In addition to supporting syndicated loans, the DTCC-Clearstream partnership will focus on integrating Loan/SERV’s bilateral loan module with Clearstream’s collateral management platform.
Bilateral loans are loans involving one lender and one borrower, as opposed to syndicated loans, which involve one borrower and many lenders.
“Phase one is syndicated loans, and phase two is bilateral loans,” said Tomenko. “The third phase is to connect the cobranded service to Clearstream’s collateral management service.”
The integration will enable Clearstream clients to use their bilateral loan portfolios as collateral with their respective national central banks, and will extend the types of asses to be used as collateral in interbank triparty transactions, said Tomenko.
Users of TS Imagine’s technology will have access to Cassini’s analytics across OTC and ETD products.
The Canadian Collateral Management Service will introduce a domestic triparty repo capability.
There will be greater opportunities for capital efficiencies when trading across cash and futures.
Institutions will have more netting opportunities, reduced margins and harmonised reporting.
The service from TMX and Clearstream will include Canada's first domestic triparty repo capability.