Version: 1.0 Syndicated Loan FpML Working Group Chair: Bhavik Katira (bkatira@tendelta.com) LSTA Agent Bank Communications Working Group Chair: Ellen Hefferan (ehefferan@lsta.org)
Contents 1 Document History... 2 2 Purpose... 3 3 Business Application... 4 4 Data Mapping Loan Party Profile Notification... 8 5 Data Mapping Loan Party Event Instruction Override Notification... 11 6 Data Mapping Loan Party Trading Instruction Override Notification... 12 7 Omitted Data Elements... 14 8 Business Validation... 15 1
1 Document History Date Version Author Changes Q1 2018 1.0 Chad Freeburg Document created as part of Loan FpML Working Group sessions. 2
2 Purpose The Loan Party Profile Notification is transmitted, in relation to an asset (deal ID, facility ID, facility type, or some combination thereof), from a single receiver of cash to a single payer of cash. Additionally, the Loan Party Event Instruction Override Notification and Loan Party Trading Instruction Override Notification are transmitted for specific discrete instances of a servicing event or trade (allocation) settlement event, respectively. The goals of these notifications are to: 1. Represent a complete set of party administrative details. The notification must describe relevant details for a single receiver in relation to assets (deal, facility, or facility type), transactions, or combination thereof. Details that must be conveyed include: Contact information which may include general, operations, credit, and call-back contacts. Identifiers including common market identifiers, such as MEI, LEI, GIIN, BIC, SWIFT, etc. Optional information, such as: o Related party information (i.e. Guarantor information) o Tax form information, including tax form type and, optionally, expiry date o o Signature block (for legal agreements) Additional information related to jurisdiction, country, region, market sector, credit rating, etc. 2. Convey details related to settlement instructions, optionally driven by currency and/or cash event. Such details include: Beneficiary information (e.g. ABA and account number) Additional optional fields to describe all the hops of the cash movement (i.e. detail related to for-further-credit scenarios) 3. Represent changes to party administrative details. Any changes to the above mentioned administrative detail information or settlement instruction information would be driven by an effective date not to be confused with a notice date or the date on which the notice was communicated. It is necessary to also express changes to settlement instructions for discrete loan servicing or trade (allocation) settlement events on a one-off basis. 4. Improve transactional integrity and party data timeliness, while reducing manual processing. Use of the Loan Party Profile Notification could reduce manual entry to loan systems of record, improving data integrity by eliminating human touches and reducing boarding time. It is possible that receipt of a profile notification message could impact settlement cash flows, particularly if changes are intended to occur prior to execution of cash flows for a cash event. A profile notification would serve the need for timely updating of details critical to ensuring appropriate transmission of funds. 3
3 Business Application The Loan Party Profile Notification is intended for the following: To describe legal entity, contact, and settlement instruction details o per currency o per asset or asset combination o one, multiple, or all cash events To revise legal entity, contact, and settlement instruction details. Some of the causes for the need to revise information include: o change in lender s credit or operations personnel o change in or refresh of lender s tax status (as expressed by tax form) or other information o merger / acquisition related to the existing lender, resulting in a legal change of the lender o change in cash account information (include correspondent account information) for the lender The diagrams below convey possible circumstances for conveyance of the Loan Party Profile Notification between Payer and Receiver Party: Agent / Book Runner and Lender Agent and Custodian (on behalf of Lender) 4
Trading Counterparties Agent and Trading Counterparty As mentioned above, the Loan Party Event Instruction Override Notification and Loan Party Trading Instruction Override Notification are intended for the following: In the case of the Loan Party Event Override Instruction Notification, to describe a change to, primarily, the settlement instructions for a discrete loan servicing event, on a one-off basis only. In the case of the Loan Party Trading Override Instruction Notification, to describe a change to, primarily, the settlement instructions for a discrete loan trading event, on a one-off basis only. 5
Business Application (continued) The Loan Party Profile Notification may be used for specific events or at specific moments within the lifecycle of a syndicated loan. Those moments include: Book Runner Group Formation As book runners (i.e. lead lenders) within the syndicate group are established early in the syndication lifecycle, those lenders must communicate information amongst each other to establish relationship ties. These details build the foundation of the lenders relationships, and drive initiation of know-your-customer and anti-money laundering due diligence. Syndication to Retail Lenders As bookrunners seek retail commitments from lenders in the syndicated loan market, those retail lenders must provide the same information that the book runners have communicated between each other. Primary or When-Issued Trades Once lenders have been allocated commitments to a syndicated deal, but before the deal has closed, lenders can enter into what are considered primary trades with other lenders. As with the previous two examples, lender information must be communicated between counterparties. Secondary Trades After a deal closes, lenders may trade commitments or portions of commitments in the secondary loan trading market, commonly in order to put investor cash to work, realize investor redemptions, or create a market as a broker of syndicated loan commitments. In order to effectively settle trades, as well as perform necessary due diligence, lender information must be exchanged between counterparties. Sales of Commitment (Lender to Lender) With decline in credit quality, lenders may choose to reclassify commitments as heldfor-sale assets and sell those commitments to other lenders in the syndicated loan market. In this situation, lender information must be communicated between parties. Oftentimes, sales of reclassified assets occur in the secondary loan trading market, but the purpose of the sale may differ significantly from trading activity in the broadlytraded par syndicate loan trading market. Change of Details (legal / tax status or other operational details) As suggested in the previous page, if a lender s legal or tax status or other operational details change that lender may need to convey critical information related to that change in order to ensure proper withholding or servicing considerations by the administrative agent. Restructure of Lender Group through Amendment With the modification of a syndicated loan credit via amendment, amended and restated agreements, or any other recast credit action, the lender group can change. When new lenders enter a deal at this stage, it is necessary to convey lender. 6
Business Application (continued) The following diagram conveys the syndicated deal lifecycle and the points within the lifecycle at which conveyance of a Loan Party Profile Notification would be appropriate: **Note: The Loan Party Event Instruction Override Notification and the Loan Party Trading Instruction Override Notification are not bound by the above lifecycle, but rather are event-specific. 7
4 Data Mapping Loan Party Profile Notification The following data fields and structures are utilized by the Loan Party Profile Notification. In the case of fields inherited from other FpML schema, Loan FpML may utilize these fields/structures to represent concepts not found in other asset classes, and the end-user of the notification should be mindful of this fact. Element Complex Type Required? Description loanpartyprofilenotification partyprofile PartyProfile Y A structure to describe communication or settlement instruction details in relation to specified assets or transactions. party Party Y [1..n] A legal entity or a subdivision of a legal entity. This complex type is used throughout the Loan FpML schema. loanpartyprofilenotification/partyprofile partyprofileidentifier PartyProfileIdentifier Y [1..n] An identifier structure for the party profile associated with the notification. effectivedate [xsd:date] Y The date on which the information conveyed in the notification becomes effective (i.e. future changes to settlement instructions, contact details, etc.). partyreference PartyReference Y The party sending the notification to the receiver. relatedparty RelatedParty N [0..n] Other parties that may be related to the receiver party. One good example would be to convey company hierarchy (for use in the context of blacklists ). documentation PartyProfileDocumentation N A structure representing relevant documentation of the party. communicationdetails ApplicableCommunication Details N* [0..n] A structure which relates an asset, or assets, to an element within a party block (customarily a business unit or person). *Though not explicitly required, at least one instance of either this element or the settlementinstruction Details element must be included. settlementinstruction Details ApplicableSettlementInstruction Details N* [0..n] A structure which relates an asset, or assets, to set pf settlement instructions. *Though not explicitly required, at least one instance of either this element or the communicationdetails element must be included. 8
loanpartyprofilenotification/partyprofileidentifier PartyAndAccount References.model [model] N A pointer style reference to a party and optionally an account. partyprofileid PartyProfileId Y A unique party profile ID, based on a scheme. loanpartyprofilenotification/partyprofile/documentation taxform TaxForm N A structure to describe the type of tax form registered by the party, and optionally an expiry date for the tax form. loanpartyprofilenotification/partyprofile/communicationdetails identifier AssociationToAssetIdentifier Y An identifier structure for the communication details element. applicableassets ApplicableAssets N* A structure that describes the assets to which the communication details are applicable. applicabletransactions ApplicableTransactions N* [0..n] A scheme that describes the transactions to which the communication details are applicable. purpose ApplicablePurpose Y A scheme to describe the purpose of a person or business unit in relation to an asset(s) or transaction(s). businessunitreference BusinessUnitReference N* A reference to the business unit element of a party block. personreference PersonReference N* A reference to a person element of a party block. loanpartyprofilenotification/partyprofile/communicationdetails/identifier PartyAndAccount References.model [model] N A pointer style reference to a party and optionally an account. associationid AssociationToAssetId Y A unique association ID, based on a scheme. loanpartyprofilenotification/partyprofile/communicationdetails/applicableassets dealidentifier DealIdentifier N* Any internal or external deal-level identifier, including internal system generated, CUSIP, ISIN, etc. *Note: this element is in a choice sequence with the facilityidentifier and facilitytype. Though none are explicitly required, one of the three choices must be selected (dealidentifier, facilityidentifier, or facilitytype). 9
facilityidentifier FacilityIdentifier N* Any internal or external facility-level identifier, including internal system generated, CUSIP, ISIN, etc. *Note: this element is in a choice sequence with the dealidentifier and facilitytype. Though none are explicitly required, one of the three choices must be selected (dealidentifier, facilityidentifier, or facilitytype). facilitytype FacilityType N* Based on the existing concrete facility types: Revolver, Term, Delayed Draw, and Letter of Credit. *Note: this element is in a choice sequence with the facilityidentifier and dealidentifier. Though none are explicitly required, one of the three choices must be selected (dealidentifier, facilityidentifier, or facilitytype). loanpartyprofilenotification/partyprofile/settlementinstructionsdetails/ identifier AssociationToAssetIdentifier Y An identifier structure for the settlement instruction details element. applicableassets ApplicableAssets N* A structure that describes the assets to which the settlement instruction details are applicable. *Though not explicitly required, either this element or the applicabletransactions element must be selected. See loanpartyprofile Notification/partyProfile/communication Details/applicableAssets section above. applicabletransactions ApplicableTransactions N* [0..n] A scheme that describes the transactions to which the settlement instruction details are applicable. *Though not explicitly required, either this element or the applicableassets element must be selected. settlementdetails SettlementDetails Y [1..n] Settlement account details to describe the account to which cash should be sent, for payments received by the party sending the Lender Party Notification. loanpartyprofilenotification/partyprofile/settlementinstructionsdetails/settlementdetails id SettlementInstructionId Y A unique identifier for the cash settlement details structure, based on a scheme. currency Currency Y Currency associated with the settlement instruction (ISO code), based on a scheme settlementinstruction SettlementInstruction Y A standard settlement instruction defining how a currency payment is to be made. 10
5 Data Mapping Loan Party Event Instruction Override Notification The following data fields and structures are utilized by the Loan Party Event Instruction Override Notification. Unlike the Loan Party Profile Notification, only settlement instructions details may be expressed within the notification, and the notification is applicable to a specific event. Element Complex Type Required? Description loanpartyeventinstructionoverridenotification override EventInstructionOverride Y The event for which the (currencyspecific) settlement instructions should be applied. party Party Y [1..n] A legal entity or a subdivision of a legal entity. This complex type is used throughout the Loan FpML schema. loanpartyeventinstructionoverridenotification/override overrideidentifier OverrideIdentifier Y An identifier structure for the override element. eventidentifier BusinessEventIdentifier Y An identifier originally created by the business event itself, and utilized by this notification to reference the original business event. settlementdetails SettlementDetails Y [1..n] Settlement account details to describe the account to which cash should be sent, for payments received by the party sending the Loan Party Event Instruction Override Notification. See loanpartyprofilenotification/ partyprofile/settlementinstructions Details/settlementDetails section above. loanpartyeventinstructionoverridenotification/override/overrideidentifier PartyAndAccount References.model [model] N A pointer style reference to a party and optionally an account. overrideid OverrideId Y A unique override ID, based on a scheme. loanpartyeventinstructionoverridenotification/override/eventidentifier PartyAndAccount References.model [model] N A pointer style reference to a party and optionally an account. eventid EventId Y A unique event ID, based on a scheme. 11
6 Data Mapping Loan Party Trading Instruction Override Notification The following data fields and structures are utilized by the Loan Party Trading Instruction Override Notification. As with the Loan Party Event Instruction Override Notification, only either incoming settlement details or outgoing settlement details may be expressed within the notification. Element Complex Type Required? Description loanpartytradinginstructionoverridenotification override TradingInstructionOverride Y The trade (allocation) for which the (currency-specific) settlement instructions should be applied. See loanpartytradinginstruction OverrideNotification/override section below tradesummary LoanTradeSummary Y A summary structure representing a loan trade. See loanpartytradinginstructionoverride Notification/tradeSummary section below. FacilityDetails. model [model] Y A model used to reference a facility by either identifier or summary, within various notifications. party Party Y [1..n] A legal entity or a subdivision of a legal entity. This complex type is used throughout the Loan FpML schema. loanpartytradinginstructionoverridenotification/override overrideidentifier OverrideIdentifier Y An identifier structure for the override element. See loanpartytradinginstructionoverride Notification/override/overrideIdentifier section below. allocationidentifier LoanAllocationIdentifier Y An identifier structure for the allocation to which the settlement instructions should be applied. See ' loanpartytradinginstructionoverride Notification/override/allocationIdentifier section below. loantrade Reference LoanTradeReference Y* A reference to a loan trade. The allocationidentifier and loantrade Reference are combined on a choice sequence. *Note: If referring to party profile details related to a trade (instead of a specific allocation), then the loantradereference branch must be selected. settlementdetails SettlementDetails Y [1..n] Settlement account details to describe the account to which cash should be sent, for payments received by the party sending the Lender Event Settlement Notification. See loanpartyprofilenotification/partyprofile/ settlementinstructionsdetails/ 12
settlementdetails section above. loanpartytradinginstructionoverridenotification/tradesummary tradeidentifier TradeIdentifier Y A unique identifier for the trade. facilityreference FacilityReference Y A reference to an asset (facility) indicated by the FacilityDetails.model. amount Money Y The amount of the trade. This complex type is made up of a currency (Currency, based on scheme currencyscheme ) and an amount (xsd:decimal) element. comment [xsd:string] N A free form text field to contain additional details related to the original trade. loanpartytradinginstructionoverridenotification/override/overrideidentifier PartyAndAccount References.model [model] N A pointer style reference to a party and optionally an account. overrideid OverrideId Y A unique override identifier, based on a scheme. loanpartytradinginstructionoverridenotification/override/allocationidentifier IssuerTradeId. model [model] N A model group for a two-part identifier such as a USI. PartyAndAccount References.model [model] N A pointer style reference to a party identifier, via a partyreference (PartyReference) and optionally an accountreference (AccountReference). The party identified in this model is the party which has authored the trade identifier. reportingrole ReportingRole N Optionally identifies the role of the party reporting a trade, based on a scheme. tradeid TradeID N* [0..n] A unique allocation identifier. *Though not explicitly required by the schema, this would be the branch most applicable to identifying the allocation of a loan trade. versionedtradeid VersionedTradeID N [0..n] An allocation identifier accompanied by a version number. In regulatory reporting views, this should be avoided except for internal messaging. loantrade Reference LoanTradeReference Y Reference to the original loan trade. 13
7 Omitted Data Elements The following data elements are inherited from shared FpML structures but are not likely to be relevant to the Loan Party Profile Notifications or the syndicated loan industry. The Loan FpML schema has been designed to function independently of these data elements: Element AbstractPartyProfileNotification/CorrelationAndSequence.model Correlation.model Sequence.model AbstractPartyProfileNotification/OnBehalfOf.model/onBehalfOf/OnBehalfOf partyreference accountreference loanpartyprofilenotification/party/party.model/partyinformation.model classification creditrating region organizationtype loanpartyprofilenotification/party grouptype 14
8 Business Validation Business validations can occur in the source system (i.e. loan system of record or trading platform), via a middleware software offering (messaging infrastructure), or manually through management of internal procedures. The following validation considerations are not structured into the Loan Party Profile Notification message, but should be considered: Applicable Transaction Identification All applicable transactions identified, via the applicabletransactions element, must be legitimate events that could occur for the assets identified. These transactions must be validated against the credit agreement (or other primary source). If several assets are identified within a single notification, not all events identified may be applicable, but each event selected must be applicable to at least one asset identified. Asset Identification Deal and/or facility CUSIPs (or other identifiers), as well as facility types, must be validated against the credit agreement (or other primary source document or system). Business Contacts (within communicationdetails ) Business contact information conveyed by the businessunitreference, and personreference structures should be validated against primary sources (i.e. company directory, or other internal business contact resources). Contact Business Purpose (within communicationdetails ) The purpose of the contact information conveyed by the communicationdetails element must be included, and sufficiently describe the purpose of the contact information being conveyed (i.e. sufficiently convey that the contact or business unit is the credit contact, servicing contact, call-back contact, etc.). Dates The effectivedate element must represent a date on or after the notification date (i.e. header creation timestamp). Loan Party Profile Notifications can be future-dated, but never backdated. Notification Applicability The sender of the notification will always be the receiver of the cash flows related to the asset or the events described therein (see diagrams on page 2). Party Identification Party identifiers (e.g. MEIs, LEIs, SNC IDs) as well as the party name (i.e. legal name) must be validated against primary sources (e.g. formation documents/charter, SNC, Markit). Related Party The RelatedParty complex type should be used to clearly articulate relationships that may extend beyond simply defining the legal lender (or signatory of the legal document). For example, this type may be used to represent the entity acting on behalf of the legal lender, i.e. for situations in which notifications are being sent by a lender s custodian, trustee, or other party. In this situation, the receiver party would be the legal lender, with the party acting on behalf of the legal lender described as the related party. All elements within the RelatedParty complex type should reflect this fact. Settlement Instructions Multiple settlementdetails elements may be conveyed for scenarios in which borrowings (and therefore interest payments) or fee payments against the same facility may occur in multiple currencies (e.g. multi-currency revolver, or currency sublimits of the same facility). 15
If multiple settlementdetails elements are included in the message, those must be validated against primary sources (e.g. credit agreement or other primary documentation source). Tax Details The tax form type must be validated against primary sources (i.e. the physical tax form presented, and any supporting documentation), based on Internal Revenue Service (IRS) guidance. 16