The PrivEx Approach
The corporate loan trading and transfer processes are archaic as its digital evolution has not grown in pace with how other securities, such as equities and bonds, have evolved. Secondary loan trading still involves “calling your 10 best friends” and manual NDA and KYC processes. This potentially results in the inefficient utilisation of resources, poor price discovery and limited liquidity.
The Global Financial Crisis of 2008 and the subsequent introduction of Basel III has fundamentally changed how banks’ lending practices and performance are assessed. Now banks are assessed on optimisation of capital and return on equity, hence, they are now required to dynamically manage their loan books according to risk-weighted asset targets and capital requirements.
PrivEx’s licensed online digital exchange provides members with its proprietary end-to-end trading solution, relieving members from “calling your 10 best friends” when trading a loan. Through our business model, members need only execute the global NDA and KYC once to ensure confidentiality in information transmission.
Through its digitised trading algorithms, trades can be listed and traded in less than 15 minutes as compared to expending approximately 19 man-hours under current protocols. “Calling your 10 best friends” results in the lack of transparency and accountability in secondary loan trading. PrivEx provides superior price discovery, enhanced liquidity and comprehensive data analytics.
Current processes are seemingly archaic and ineffective, and financial institutions will need to recycle capital more efficiently to adhere to Basel regulatory requirements.
Inefficient manual
processes
- Execution productivity is solely based on resources of individuals, “Calling 10 Best Friends”.
- NDA, KYC and AML processes are individually executed tediously for each transaction.
- Approx. 19 man-hours are required to fully execute one trade.
Poor price discovery
and liquidity
- Trade is typically executed with first successful bidder based on internal “reserve” price.
- Limited liquidity and absence of bidding tension may result in failure to achieve optimal price discovery.
- There is a lack of anonymity which potentially discloses the seller’s loan position and strategy.
Absence of transparency in loan trading data
- There is a lack of real-time loan market pricing for benchmarking against trading price.
- Management teams are unable to accurately assess the value of loan books when reviewing banking systemic risks and compliance objectives.
The PrivEx Approach grants users with:
TRANSPARENCY
- Proprietary trading dashboard provides real-time instant access to loans from global financial institutions on a single platform.
INCREASED LIQUIDITY
- Wide universe of potential buyers and sellers (banks, funds, alternative investment firms) without the need of physically reaching out.
SUPERIOR PRICE DISCOVERY
- Fair trading is reflected in real-time prices from loan listings which allow both buyers and sellers to target optimal trade levels.
LICENSED REGIME
- Licensed and regulated as a Recognised Market Operator (RMO) by MAS.
- See RMO Directory here
EASE OF EXECUTION
- Sourcing, communication, and execution on a single platform.
- Loan market compliant and populated documentation.
- Simplified yet structured process of a one-time execution of NDA and KYC documents.
GUARANTEED SECURITY
AND DATA ACCURACY
- Compliant with MAS Technology Risk Management and Cyber Hygiene policies.
- Secured close loop of licensed banks, funds and alternative investment firms.
- Data analytics to support loans pricing and provide market insights.
At PrivEx, we employ world-class security systems and vendors, while adhering to strict security standards established by the
Monetary Authority of Singapore.
