Choosing to Go Fast

Yesterday, Ipreo announced the completion of a commercial partnership with Cortland Capital Market Services. The partnership combines Cortland’s administrative agency services with Ipreo’s new loan trade settlement platform, LTS.

Available now, the combined offering includes integration of the firms’ technology systems and aims to offer reliable T+3 loan trade settlement to our customers.

In August of 2013, Ipreo’s Loan Trade Settlement group published a white paper, “Trained to be Slow – Understanding T+24 Loan Trade Settlement,” that tackled the systemic issue of slow trade settlement. The paper identified the three main reasons loan trades take about a month to settle and offered recommendations for accelerating the process.

“To meet the emerging demand for swift, certain loan trade settlement, we propose a new approach. We re-assess the decisions faced by the LSTA in 1995 in the context of the loan market of 2013 and propose an alternative settlement paradigm. This approach requires neither expensive new technology nor revolutionary changes in assignment documentation. Rather, it asks loan investors to clear trades like bond investors — to act promptly or submit to fair consequences for the failure to act.”

Just last month, a second white paper, “Choosing to Go Fast – How to Settle Loan Trades on T+3” laid out our specific tactics for shortening settlement times, based on our earlier recommendations, in which we concede despite consensus that settlement times need to improve, it’s up to the market to embrace our new methods.

“Despite the considerable savings that prompt settlement can bring to both banks and fund managers, the question remains as to whether the market will embrace the opportunity. After all, inertia is powerful and loan trade settlement has been slow for a very, very long time. We believe, however, that once the basic choice between slow and fast becomes clear, loan closers will choose to go fast.”

Our partnership with Cortland is evidence that the market is responding to our efforts, and we are excited to put these tactics into practice, with the aggressive goal of shortening settlement times to just three days.

Get access to both white papers visit the LTS website.