DTCC and Clearstream Offer Loan Service
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.
Phase 5 of the uncleared margin rules came into effect on 1 September.
Triparty repos can be executed across U.S. Treasury securities to central clearing.
Traders on EQONEX will be able to use US dollars, USD Coin and Bitcoin as margin for derivatives trading.
DTCC’s Margin Transit Utility simplifies the transfer of collateral.
Smaller entities come into scope in phase five of the uncleared margin regulations on September 1.