The Loan Market Association (LMA) supports the drive by Her Majesty’s Treasury (HMT) to promote wider sources of funding for the UK corporate sector.
In formulating a response to HMT’s discussion paper, the LMA considered the inherent infrastructure of the syndicated loan market and whether there are any areas that could restrict investors into the corporate sector. Its conclusion is that there are no material infrastructure obstructions to non-bank investors participating in syndicated loans, but there are certain practical considerations that could be addressed to facilitate participation by non-banks. These include greater use and availability of credit ratings and improvements in the settlement infrastructure. In the latter case, a move towards more automated electronic settlements and clearing systems would expedite the transfer of loans, and the LMA has been and continues to work very actively with market practitioners in this area.
It has also identified areas where the UK government can play an important part, such as amending the current treaty clearance requirements to accommodate foreign investors and reviewing the Know Your Customer (KYC) requirements, particularly for secondary market transactions.
Clare Dawson, managing director of the LMA, said: “We look forward to continuing this discussion with HMT to facilitate wider investment in the UK corporate sector, as we believe there are areas where constructive changes could be made, in particular by reviewing current treaty clearance and KYC requirements.”
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