Trade Settlement (TSI) launched its fully automated settlement platform for the distressed loan market.
The new capabilities bring the market substantial time and cost efficiencies, greatly streamlining the process of trading and settling distressed loans.
The new distressed platform, now accessible to all authorized TSI users at www.trade-settlement.com, makes use of automated functionality instead of the manual elements of the loan closing process. This allows for information sharing in a totally secure and efficient Web-based environment.
It offers users and their agents the ability to prepare and sign distressed transfer documents online, such as trade confirms, assignment agreements, purchase and sale agreements, and purchase price letters.
It also makes the management and tracking of loan inventories and related loan activity easier, offering an easier way to allocate trade inventory to open sales.
Relevant data is streamed in and out of the platform via dynamic, real-time interfaces with certain back-office lending and portfolio management systems, removing double entry and maximizing the transparency of a trade’s closing status. This results in more accurate and timely cash and position reconciliations.
With distressed loan volume climbing to $140 billion in 2009, a 250% increase from 2008, settlement times have not improved, according to a release from TSI.
Average settlement for distressed loans considerably lagged settlement for par trades in the last two years, based on industry statistics. This can have significant negative consequences for market participants.
TSI’s new distressed loan settlement platform has been piloted by several market participants in the past months. User feedback has been positive and prospects for use by both the buy and sell side institutions are strong.
“We have put in place a tremendous opportunity for market participants to improve the efficiency of post-trade processing of distressed loans,” said Pat Loret de Mola, president of TSI. “The industry wants and urgently needs an automated settlement platform to help achieve business and operational goals. The new automation for distressed loans does just that while providing greater transparency and better tracking of settlements. This will lead to quicker completion of trade processing and lower transaction costs. And, we believe, the automated platform will help drive the future, healthy growth of the market.”