Blockchain Applications in Commercial Finance: Loan Syndications, Servicing, Swaps, Trade Finance and More

Description

Blockchain is a viable and expanding technology in commercial finance. A single blockchain can embody all transaction information in one digital shared document, which is updated nearly instantly and is simultaneously viewable by all members on the network. Several areas of finance are particularly well suited to benefit from DLT.

The syndicated loan market, in which financial institutions participate as arrangers, agents and lenders to corporate borrowers, is one of the most promising candidates for the use of blockchain. The secondary trading market for these loans--purchased, sold and maintained on different centralized intermediaries' books and records or registries--could be processed on a single ledger.

In trade finance, the importer, exporter, shipper, banks, etc., typically maintain their databases for documents related to a transaction (the letter of credit, bill of lading, invoices, etc.). DLT would allow for immediate settlement of each step in the trade process, reconciled, verified and accessible by all parties.

Interest rate swaps (among other financial derivatives) are primarily paper-based, and blockchain can streamline numerous settlement issues. There are also benefits for sale and financing of trade receivables and chattel paper from blockchain platforms to obtain efficiencies in settlement times, security, ownership status and other matters.

Listen as our authoritative panel discusses the architecture of DLT and how it varies from traditional transactions requiring a central intermediary. The group will also discuss the legal ramifications and security concerns presented by blockchain.