Synaps Loans LLC announced the successful demonstration of the first working blockchain solution for syndicated loan servicing. R3s Lab and Research Center managed the proof-of-concept testing of the system, which was exclusively developed by Synaps, a joint venture of Ipreo and Symbiont. Credit Suisse helped arrange the project, which included participation from key agent banks, service providers, and fund managers.
Synaps combines Symbionts leading smart contract technology and Ipreos new business process solution to help speed loan trade settlement. Nineteen firms participated in the demonstration, including Barclays, BBVA, Danske Bank, LSTA, Royal Bank of Scotland, Scotiabank, Societe Generale, State Street Corporation, TenDelta LLC, U.S. Bank, and Wells Fargo. Influential buy-side firms AllianceBernstein (AB), Eaton Vance Management, KKR, and Oak Hill Advisors were also involved in the initiative.
Synaps now has the majority of the functionality needed to implement blockchain technology at scale in the syndicated loan market, which enables us to move into the final stages of development, said Emmanuel Aidoo, head of the distributed ledger and blockchain effort at Credit Suisse. Over the coming months we will work with Symbiont and Ipreo to implement the remaining functions to allow for distributed ledger technology to support a syndicated loan facility from origination to payoff, and work toward market adoption. The technical and market expertise that the project participants brought to the table means this solution will be tailor-made for use in live transactions.
Robert Berk, Senior Vice President and Chief Operating Officer at U.S. Bank Capital Markets said, The hugely successful testing of this technology has proven it can drive transparency and efficiency in the syndicated loan market. There are clear benefits to borrowers, agents, and asset managers. This is certainly the most automated market solution we’ve seen to date.
Joseph Salerno, MD of Loan Trade Settlement at Ipreo and CEO of Synaps Loans said, The project participants provided invaluable subject matter expertise from a wide range of perspectives: agent, dealer, fund manager, and custodian/trustee. This enabled us to design a system that delivers value for the entire loan market.
With this project we have proven that smart contracts can revolutionize the entire lifecycle of a loan, from creation to settlement in secondary trading, said Mark Smith, Co-Founder and CEO of Symbiont. Fifteen different parties played roles in the final demo, executing bespoke and complex tasks on-platform. We look forward to working with these parties to deploy the technology in production.
Tim Grant, CEO of R3s Lab and Research Center, commented, The successful completion of such a major project involving a large group of firms is testament to the working environment we have built at R3. In less than two years we have become the financial services industrys center of gravity for collaboration and innovation in distributed ledger technology. We work with our members to ask the difficult questions, mutualize experience and resources, evaluate technology with an independent perspective, and support the delivery of real-world distributed ledger applications.
Weve prioritized this as a use-case because we see great potential benefits for leveraging blockchain for the syndicated loans market, as it is an important asset class for our clients, said John Burnett, head of blockchain development for State Street. We feel confident that this solution is the right one to take live and we look forward to further advancement of this pilot with these organizations.
A block chain-based solution has the potential to vastly reduce loan settlement times from current levels, said John Mack, Managing Director, Operations & Client Accounting at Oak Hill Advisors.
This proof-of-concept takes a significant step toward a new syndicated loan operating paradigm, and R3s and Synaps ability to garner collaboration amongst competitors is a tribute to the thirst for this paradigm shift. The future of the syndicated loan space will be very interesting, said Chad Freeburg, Senior Consultant at TenDelta LLC.
Through Synaps, loan investors have 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.