DLT consortium forms for syndicated loan market
Written by Anthony Strzalek
A consortium which includes Finastra, R3 and seven leading banks are working together to create a platform for the syndicated lending market based on blockchain technology.
The group are looking to develop an online marketplace, called Fusion LenderComm, in order to drive transparency and efficiency in the syndicated loan market.
Underpinned by Corda, R3’s distributed ledger technology (DLT) 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.
The move is expected to slash the operational cost and burden of agent to lender administration and deliver self-service capabilities to lenders, providing accurate information on demand to optimise 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.
Simon Paris, deputy CEO of Finastra, said: “No more will lenders find themselves an underserved part of the syndicated loan value chain. Where they have struggled with a lack of transparency and speed in accessing critical deal positions, Fusion LenderComm opens up new data plains beyond position reconciliation.
“The community of banks already on board covers approximately 10 per cent of the global syndicated lending market and demonstrates the appetite to make this market utility a success. As more participants join, we will quickly gain the critical mass to develop this into the leading marketplace for syndicated lending and loan trading.”
Ivar Wiersma, head of innovation at ING Wholesale Banking, added: “Exchange of information in the syndication lending market is predominantly done manually. This means that accessing deal data, including transparency into accruals and interest rates, can be a time consuming process.
“The initial focus of Fusion LenderComm is to automate the predominantly manual process of information sharing and to offer better insight in deal data. Further along the line, Fusion LenderComm will ensure a further increase in speed and cost reductions which may lead to smaller participations in syndicated deals and new investment opportunities for our clients.”