IHS Markit Has a Plan to Tokenize the $1 Trillion Syndicated Loan Market

That may soon change as IHS Markit, the market infrastructure giant, is developing a new blockchain-based system to handle the payments leg of syndicated loan trading - and eventually, a wider range of financial transactions.

This is what IHS Markit is doing with Stax, which will begin its testing phase this summer.

John Olesky, a managing director and the head of product management at the London-based company, explained that IHS bank customers will wire money into an old-fashioned account.

The deposited amounts are then converted into digital tokens on a private network, and ultimately the digital wallets will allow for the ongoing settlement of transactions.

By themselves, syndicated loans represent a large and important market.

A majority of it is settled through IHS Markit's loan solutions platform, which was created in 2007, making it older than the invention of blockchains but a spring chicken by legacy financial system standards.

According to Olesky, the smart contracts decide when a trade is ready to close and perform the cash settlement, and so the system does not shorten the trade lifecycle.

Syndicated loans are Olesky's area of financial trading expertise; his previous job was heading up IHS Markit's loan market strategy.

IHS Markit has taken a practical approach with Stax.

Olesky would not name the big players that would be taking down nodes in the first instance of testing, but a logical candidate is JP Morgan, which also recently tested a $150m Yankee certificate of deposit using tokenized cash on Quorum.