Markit and Euroclear sign memorandum of understanding
19 December 2011 Brussels
Image: Shutterstock
Markit and Euroclear Bank have signed a memorandum of understanding to jointly create an operational infrastructure to support the use of loans as collateral in financing transactions. In parallel, Markit and Euroclear Bank intend to collaborate on introducing a series of other services to enhance transparency, automation and trade settlement for the European leveraged loan market.
To enable the use of loans as collateral in financing transactions among trading counterparties and central banks, Markit will provide loan pricing and other market data to make it possible for Euroclear Bank to extend its pool of collateral to include loans in triparty collateral management transactions. Scheduled to be deployed in 2012, the joint service will increase refinancing possibilities for loan portfolios and diversify bank funding sources.
Other services planned by Markit and Euroclear Bank for the loan market include:
- the integration of Euroclear Bank’s delivery-versus-payment settlement services with Markit ClearPar and Markit Clear, Markit’s electronic platforms for loan trade settlement;
- a new asset servicing platform for syndicated loans that links Markit’s loan messaging hub for agents and lenders with Euroclear Bank’s expertise in event reporting and payment execution; and
- the use of Markit data to expand reconciliation services available through Euroclear Bank’s LoanReach platform.
Joe Widner, managing director and global head of loan processing and portfolio management at Markit, commented: “We are excited about partnering with Euroclear to develop innovative services and technology to improve liquidity and introduce new opportunities to the European loan market. Our shared goals are to help the market grow through new solutions such as using loans as collateral, and to reduce risks and inefficiencies by automating trade and cash settlement.”
Jo Van de Velde, managing director and head of product management at Euroclear, added: “Financial institutions around the world will increasingly look at their loan portfolios as one of the means to obtain stable funding at attractive rates. Euroclear Bank’s existing LoanReach and triparty collateral management services, together with Markit’s loan products, will expand the pools of collateral available to our clients by including a new asset class. "
We are very excited to have found in Markit a partner with a unique franchise and proven track record in the syndicated loans area. Our respective services are complementary and even stronger whenoffered jointly.”
To enable the use of loans as collateral in financing transactions among trading counterparties and central banks, Markit will provide loan pricing and other market data to make it possible for Euroclear Bank to extend its pool of collateral to include loans in triparty collateral management transactions. Scheduled to be deployed in 2012, the joint service will increase refinancing possibilities for loan portfolios and diversify bank funding sources.
Other services planned by Markit and Euroclear Bank for the loan market include:
- the integration of Euroclear Bank’s delivery-versus-payment settlement services with Markit ClearPar and Markit Clear, Markit’s electronic platforms for loan trade settlement;
- a new asset servicing platform for syndicated loans that links Markit’s loan messaging hub for agents and lenders with Euroclear Bank’s expertise in event reporting and payment execution; and
- the use of Markit data to expand reconciliation services available through Euroclear Bank’s LoanReach platform.
Joe Widner, managing director and global head of loan processing and portfolio management at Markit, commented: “We are excited about partnering with Euroclear to develop innovative services and technology to improve liquidity and introduce new opportunities to the European loan market. Our shared goals are to help the market grow through new solutions such as using loans as collateral, and to reduce risks and inefficiencies by automating trade and cash settlement.”
Jo Van de Velde, managing director and head of product management at Euroclear, added: “Financial institutions around the world will increasingly look at their loan portfolios as one of the means to obtain stable funding at attractive rates. Euroclear Bank’s existing LoanReach and triparty collateral management services, together with Markit’s loan products, will expand the pools of collateral available to our clients by including a new asset class. "
We are very excited to have found in Markit a partner with a unique franchise and proven track record in the syndicated loans area. Our respective services are complementary and even stronger whenoffered jointly.”
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