Markit has created the first electronic link between agent banks and lenders so that they can have real-time sharing of comprehensive agent data on syndicated loans.
Bank of America and Credit Suisse are the first agent banks to pilot this initiative, which aims to streamline the flow of critical information and speed trade settlement in the loan industry.
Markit has created the new link to loan inventory data at agent banks by combining capabilities of its ClearPar and Storm Networks platforms, which were both bough in early 2010. ClearPar and Storm, which make up Markit’s loan trade settlement business, will be branded as Markit Clear.
Markit Clear’s new agent inventory system will offer lenders of record access to consolidated and real-time loan information that is maintained by agent banks, including trade history, positions, loan activity and contract information. Access to up-to-date position data is needed to manage exposure limits, according to Markit. It is also an important step by the firm to facilitate faster settlement of loan trades, reducing risk and volatility as well as ultimately attracting more investors to the loan market.
For agent banks like BofA and Credit Suisse, the ability to share inventory data with lenders electronically will limit the errors due to manual processes as well as the time spent investigating lenders’ requests for data.
The loan market transmits information mostly through fax. Each year, over 15 million faxes are sent from agent banks to lenders of record. Markit Clear expects more banks to go live with Markit Clear in the coming months.
“We are excited that Bank of America and Credit Suisse are the first banks to integrate with Markit Clear’s platform to transform the syndicated loan market," said Joe Widner, managing director and global head of loan processing at Markit. "Automating the flow of information between agent banks and lenders is an important first step in reducing risk, speeding settlement time for trades, and, ultimately, increasing liquidity in the loan market.”
“We are pleased to be working with Markit Clear to improve efficiency in the loan market by making inventory data directly accessible to lenders of record," said Brian Callahan, managing director in global loans and Special Situations Group at Bank of America. "This is a milestone in lowering settlement times and achieving a straight-through-processing model for the bank loan industry.”
“Providing electronic access to loan inventory information is a meaningful benefit for firms that invest in loans. We look forward to working with Markit Clear to continue to innovate in the loan market,” Tom Newberry, managing director and head of global leveraged finance capital Markets and syndicated loans at Credit Suisse.
Aside from the Markit Clear platform for settling par and distressed loan trades, Markit also provides a variety of services for buy-side firms and agent banks in the loan market. It offers valuations and liquidity metrics for over 6,500 leveraged loan facilities in North America and Europe as well.
Markit’s iBoxx USD Leveraged Loan Index is the only loan market benchmark that has reference and deal data in real time, while Markit’s LCDX and iTraxx LevX indices provide exposure to loan CDS.