Ipreo, Symbiont Combine Forces to Tackle Syndicated Loans Market

Financial technology vendor Ipreo and Symbiont, a startup focusing on blockchain technologies, announced they are creating a new company that will focus on disrupting the syndicated loans market.

The new firm, which has not been named yet, will bring together Ipreo's loan settlement platform, LTS, and Symbiont's experience in the blockchain space and its "SmartLoans," which are smart contracts for the loan market.

Joe Salerno, who heads up Ipreo's loan trade settlement business and will serve as the new company's CEO, tells WatersTechnology the focus will be to significantly reduce the settlement periods in the space, which, according to Salerno, are "famously slow."

"This settlement problem has been fixable for a long time, and I know we can deliver T+3 settlement. We have everything that it'll take to make that happen," says Salerno, who has over two decades of experience in the loan markets. "My goal is to fix this settlement problem so it's finally in the rear-view mirror for our entire industry. I think blockchain technology is what's going to help people get excited about implementing those processed steps that get us to T+3."

Match Made in Heaven

Salerno says Ipreo first focused on settlement of loan trades roughly two years ago, eventually releasing a solution in September 2015. Around the time of the release, Salerno says the firm became aware of blockchain technology.

While there was some initial skepticism, three months ago, Ipreo came across some of the work Symbiont was doing, specifically with smart contracts and smart securities. That's when the realization first hit that there was the potential for a partnership, according to Salerno. The idea of bringing the two firms together was brought up to Symbiont CEO Mark Smith roughly two months ago.

For Salerno, Symbiont was the right fit because it met all the needs Ipreo was looking for in a blockchain partner.

"Of all the different blockchain providers, it's a smaller subset that's interested in financial services, and a smaller subset, too, that really has done anything innovative around smart contracts. It's even smaller inside of that group the number of people who understand that we need to move a predominant amount of the business logic on chain to get real value," Salerno says. "I think the universe just dwindled down to Symbiont."

Robby Dermody, co-founder of Symbiont and the COO of the new entity, tells WatersTechnology that it was a unique situation. As a startup, Dermody says more often than not it's Symbiont's job to show firms the value of the technology.

Dermody says Ipreo's size and experience in the industry was appealing, as it could provide guidance throughout the process due to a deep knowledge of a part of the industry that is so complex.

"When you're considering something like syndicated loans, we just can't forklift the entire system and put in something totally new," Dermody says. "To be truly successful we're taking an approach where we take one step at a time and show definite results after each step."

Solution Coming

Those results will come soon, according to Salerno. The company is already a few weeks into getting the specifics on some use-cases. Salerno says the goal is to have the first deliverables available as soon as two to three months from now.

A big factor in dictating the pace of how quickly a solution is released will be based on the customers. How big the solution needs to be based on customer needs will affect the speed at which a release can happen. The potential for a quick release is there, though, because both firms have product-ready systems, Salerno says.

The difference between this solution and others in the market is its use of smart contracts. Others in the space, according to Dermody, are using token technology, which looks to simply address the quantities.

For Dermody, syndicated loans represent a perfect use-case to demonstrate the power of blockchain technology and smart contracts.

"There is so much operational footprint involved, so the goal is to essentially take all of that operation footprint, or logic, which today is in legal contracts between these parties," Dermody says. "The long-term goal is to really take bites off that more and more and bring it into these ‘SmartLoans,' and eventually automate the loan process as much as possible. You'll still have touch points for humans into the system to do things like approval, but the nitty gritty procedural stuff, which is taken care of by people today, would eventually be taken care of by these ‘SmartLoans.'"

The Bottom Line

Ipreo and Symbiont believe that by bringing together their experience in the syndicated loan business and combining it with blockchain technology, they can significantly disrupt the space by greatly decreasing settlement time.