Alltel Information Services has introduced software designed for banks and other companies trying to take advantage of the expanding secondary market for commercial loans.
The software is said to speed up loan trades, which in some cases can take up to 15 days to settle. It was built by Advanced Information Resources Ltd., a San Diego-based company Alltel acquired in August to add commercial lending to its consumer loan product set.
Sanwa Bank Ltd. in New York has installed a stand-alone beta version of the Secondary Sales and Trading module, an add-on to Advanced Information's Advanced Commercial Banking System. A version integrated with that system's core software product, Deal and Loan Servicing, is expected to be released in November.
Little Rock-based Alltel says 32 companies are using the Deal and Loan Servicing program. The secondary sales and trading version to be integrated with it will be pitched to large commercial and investment banks doing business in both the primary and secondary commercial loan markets.
The seven-year-old secondary commercial loan market is expanding as more banks and portfolio managers seek to absorb liquidity in their trading portfolios and balance the ratio between risk and return on their balance sheets, said Lisa Nappi, Secondary Sales and Trading product manager in San Diego.
The stand-alone version of Secondary Sales and Trading is being targeted to new market entrants such as insurance companies, mutual funds, hedge funds, and bank start-up desks. Ms. Nappi said
The module complies with standards set forth by the Loan Syndication and Trading Association, which is working with Europe's Loan Market Association and the Asian-Pacific Loan Market Association to standardize the secondary loan market, Ms. Nappi said. That effort, coupled with an increase in dependable data, is driving market growth, she said.
Ms. Nappi said the audience for the Secondary Sales and Trading system includes smaller banks and portfolio managers that use spreadsheets or crude systems built in-house to capture, price, and process loans.
Automation and integration also help to reduce operating costs and risks, she said.
Secondary Sales and Trading processes loan trades from entry to confirmation to settlement, and tracks trading exposures, limits, positions, and profitability in real time. When integrated with the Deal and Loan Servicing program next month it will combine servicing and trading activity. Secondary Sales and Trading also integrates with third-party commercial lending software.
Ms. Nappi said the module supports a number of currencies and will eventually be rolled out on a global scale. Additional pricing data and Web capability will also be added, she said.