New technology lowers old barriers to loan market

The IMN Investors' Conference on CLOs and Leveraged Loans on May 16-17 in New York brought together several hundred professionals from the syndicated lending and structured finance markets. I was privileged to join a panel of experts discussing how fintech is shaping the CLO market. During the panel, there was broad consensus on three technology trends that are making it easier for asset managers to operate in loans.

The pace of automation in the markets is accelerating

Innovative technology and managed services allow companies to quickly scale up operations in the loan market while focusing on their core strengths of credit analysis. Web based platforms and service providers which specialize in back and middle office eliminate the need for firms to maintain dedicated Ops and IT infrastructure for the loans asset class. Furthermore, connectivity from agents to lenders has been steadily moving to FpML, making it easier to manage positions in real time, and electronic connectivity to settlement platforms removes dual keying of information, giving firms a higher degree of control of the trade settlement process.

Access to information is going mobile

Portfolio managers and traders in the leveraged loan market now want access to portfolio information on their mobile devices. HTML5 sites are the new benchmark, making it realistic to view, present and analyze portfolios on mobile devices 24/7.

Transparency is even more important given new regulations and the faster pace of the market

With risk appetite in loans frequently changing within a single session, participants are upgrading their tools to reconcile positions, cash and market value. Monthly true-ups and NAV strikes on managed accounts and CLOs are no longer sufficient. Now the market demands daily NAVs and must accommodate investors from exchange traded markets who expect the transparency that comes with complete reconciliation and portfolio view.

If you would like to know more about how Markit is improving automation, delivering mobile applications and providing tools to improve decision making, click here.

S&P Global provides industry-leading data, software and technology platforms and managed services to tackle some of the most difficult challenges in financial markets. We help our customers better understand complicated markets, reduce risk, operate more efficiently and comply with financial regulation.

This article was published by S&P Global Market Intelligence and not by S&P Global Ratings, which is a separately managed division of S&P Global.