Page 24 - MTIA Summer 2022 Market Brief

for broadly syndicated loans, middle market, distressed debt, and other lending
types. Collaboration with and among outsourcers, data providers, trustees, and
agents is essential to addressing these gaps.

Mind the Gaps

Lack of data standardization in loan markets is a fundamental reality. There is no
market-wide data governance or general repository. In this context, loan markets
face four main gaps:

Standardization
A global industry-wide set of standards remains years away and may
even be unrealistic.

• Data and information about loans do not reliably tie back to the
equivalent of a security master such as a CUSIP or ISIN.
• These gaps widen in the middle market segment.
• Data formats for loan agent notices also vary.

Reconciliation
We are far from having real-time, fully automated reconciliation.

• Market data providers can have overlapping but incomplete
coverage of loans.
• While some progress towards standardization has occurred with
the European Central Bank’s AnaCredit initiative, data coverage is
not global.

Timeliness
Some providers post data on a pre-closing basis and do not include
last-minute shifts that could impact trading decisions.

• Post-LIBOR rates and accrual calculations have added additional
confusion.
• Information such as cash and position data is typically received
on a T+1 basis.
• The timing of information about loan amendments can be spotty.

Delivery
We see wide dispersion in the means of delivery of loan
information from both agents and other providers to managers.

• Solutions such as web-based portals, SFTP, and APIs have still
not dislodged emailed PDFs or even faxes and phone calls.
• Machine learning and optical character recognition have managed
to produce some improvements.
• AI has not matured enough to deliver self-learning reconciliation
that adjusts to unexpected new variations.

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