Page 22 - MTIA Summer 2022 Market Brief
P. 22
Where loan agency services are Challenges in the Loan Market Ecosystem
delivered by an agent that is part The markets are an ecosystem where new entrants, small to mid-size asset
of a regulated banking group, managers, and even long-standing asset management firms looking to optimize
their operations will actively seek out strategic partners among originators,
a higher bar is applied to these
custody managers, data providers, named agents, sub-agents, middle office, and/
loan-related transactions and
or fund accounting providers.
activities, especially in areas
such as wire fraud mitigation and While a loan data and servicing network allows each participant to focus on what
they do best, it also creates multiple exchange points for information about loans.
collateral reporting.
When information moves from one party to another, it risks degrading in quality
and timeliness.
Potential Challenges
• Facility register integrity in areas such as global amounts, spreads,
and maturity dates
• Accurate and timely cash availability data to
optimize returns
• Aggregation and integration of data into meaningful reports and formats that
ultimately benefit the end investor
• Buy-side breaks and reconciliations in areas such as loan data and
characteristics between internal asset management systems, custodians and
trustees, agent banks, rating agencies, and other third parties
Avoiding the Scale Trap
No one has developed a perfect mousetrap, although many loan agents, including
Wilmington Trust, continue to innovate in technology, talent development, and
process improvement. Situational intelligence still wins the day.
While size can offer some advantages in some scenarios, it does not fit every
need or provide the comfort level needed for every circumstance. Regardless of
the service provider they select, loan agency clients should make sure to avoid the
scale trap by asking prospective partners tough questions about their ability to
deliver “flex” in an ever-changing market.
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