March 2, 2017 - The potential of blockchain was an overriding theme at SFIG Vegas this week. While blockchain is slated to solve everything but the common cold, it was noteworthy that – even in a large, multi-asset securitization conference – syndicated loans were flagged as a particularly compelling use case.

In fact, this theme has been accelerating lately. Last week, detailed how R3, a consortium of banks, institutional investors and technology providers, is exploring blockchain’s ability to reduce settlement times and other inefficiencies in the syndicated loan market. The proof of concept is expected to be demoed in mid-March; ideally by next year, blockchain can take over processes for a small subset of loans. The idea is that, with blockchain, lenders would have direct access to systems of record for syndicated loans, obviating the need for manual review, data re-entry and reconciliation, explains. Thus, blockchain technology theoretically can facilitate faster settlement and more efficient loan processes.

Of course, technological impediments are not the only sticking point with loan settlement. As Bram Smith, LSTA Executive Director, explained in the article, “[Settlement] is an extremely complex problem, involving elements of legal, operations, behaviour and technology.” And that is why, while supporting blockchain initiatives, the LSTA has taken a multi-disciplinary approach to shortening settlement times. On the behavioral front, last September the LSTA introduced the new “delayed compensation” regime with the express goal of expediting settlement. And, as the WSJ wrote last week, the new delayed comp regime seems to be working. Despite suffering from the usual “January Effect” settlement times have trended down since the new regime went live. (One observation with respect to the excellent WSJ article: The LSTA generally welcomes blockchain, rather than fears it.

*Note that some of the linked articles require subscription or registration*

Become a Member

Membership in the LSTA offers numerous benefits and opportunities. Chief among them is the opportunity to participate in the decision making process that ultimately establishes loan market standards, develops market practices, and influences the market’s direction.

View Current Members

Our Partners

cusip-global-services-vector-logo.svgFitch Group logoRefinitiv-(March-2019)SP-Global-Market-Intelligence
Total Results: 

Sort by:

Blockchain and Smart Contracts

This week the LSTA’s Bridget Marsh and Tess Virmani are pre-recording a presentation with members, Joe Dewey of Holland & Knight and Arleen Nand of…

ESG Diligence Questionnaire FAQs

Companies and their investors are increasingly focused on how environmental, social and governance (ESG) factors impact their businesses. For many investors, being aware of the…

LSTA Newsletter: July 31, 2020

This week, Lee Shaiman heralds the return of the LSTA Loans Magazine, Meredith Coffey discusses our 2020 Hindsight, Ellen Hefferan and Lisa Schneider thank, congratulate…