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First Working Blockchain Solution for Syndicated Loans Market Demonstrated

Vendor Synaps Loans and a group of banks working under the R3 blockchain banner have made big progress in an initiative to apply distributed ledger technology to an overhaul of the antiquated and costly manual intervention in the US$3 trillion global syndicated loans market. Synaps Loans - a joint venture created last year through a partnership between smart contract vendor Symbiont and loan settlement platform provider Ipreo - worked with Credit Suisse and a host of agent banks service providers and fund managers to carry out a successful demonstration of the working blockchain system for syndicated loan servicing. Nineteen other firms participated in the demonstration, including Barclays, BBVA, Danske Bank, LSTA, Royal Bank of Scotland (RBS), Scotiabank, Société Générale, State Street Corporation, TenDelta, US Bank, and Wells Fargo.

Settlement periods of 20 business days or more threatened the continued growth of the loan market. Syndicated loans have a record unsettled exposure of more than US$70 billion, over twice that of high-yield bonds. For the sell-side, the delays tie up precious capital. For the buy-side, settlement uncertainty confounds cash management and necessitates costly credit lines.

Synaps says that it gives loan investors direct access to an authoritative system of record for syndicated loan data. This yields immediate savings by reducing manual reviews, data re-entry, and systems reconciliation. In the future, loan data processing can be done exclusively on the distributed ledger, the firm believes, eliminating the cost for each market participant to maintain its own separate lending system.

News Characteristics

Date : Mar 31, 2017
Region : North America
Industry : Banks
Function : Operations and IT
Sub-Function : IT Modernization/Transformation