DTCC and Markit launch payments system to smooth loan settlement

DTCC and Markit have announced the launch of a payment system for loans designed to reduce settlement risk in the secondary loan market. The service will allow cash to change hands for a loan at the same time that the change of ownership takes effect – something which does not necessarily happen now. Payments for multiple loan trades can also be netted to reduce the amount of cash being transferred.

The system has been trialled for four months by three banks - BNY Mellon, Citi, and JP Morgan - and by two buy-side firms, MJX Asset Management and Sankaty Advisors. The service, which is called Cash on Transfer, goes live for a broader set of users this week. BnY Mellon acts as the paying agent for the service, which links to ClearPar, Markit’s loan settlement platform.