December 17, 2019 11:30 am

High interest in NPL transaction platforms

NPL transaction platforms can make an important contribution to reducing the stock of bad loans in Europe. In order to harmonize the requirements for platform operators and set important standards, the DKS (Deutsche Kreditmarkt-Standards) conducted a survey among market participants in cooperation with the European Commission this fall. The results have now been announced.

The DKS survey was conducted from 15 October to 30 November 2019 in the form of an online survey. 89 people from 15 nations took part in answering the questionnaire. Around 90 percent of those responding are familiar with trading NPLs; six out of ten participants have already gained experience with NPL transaction platforms.

Key messages

For market participants, the advantages of an NPL transaction platform are, in particular, that the auctions run online and a virtual data room is linked. Another plus point is the wider investor base. For the respondents, an easy access, a simple IT structure and an overall reduced workload are important fundamental requirements for the platforms.

As a special incentive for the use of an NPL transaction platform, a majority of participants see improved access to market data. A broader investor base to achieve higher prices, lower fees, easy software access and minimal data requirements are also often cited. The use of an NPL transaction platform can also help less experienced market participants.

In addition, participants in the survey are in favour of platforms that are available in several languages. However, respondents are split on the pricing mechanism: The “English auction”, in which the current maximum price is visible to everyone, was named by every second market participant. The first price auction, in which bidders place their bids only once and undercover, attracted 45 percent of the votes.

What happens now?

On 5 December, Jörg Keibel, Vice-President of the DKS, presented the results to the European Commission. In spring 2020 there will be another roundtable on NPL transaction platforms. The new standards will probably be implemented in the course of the year.

This post was written by Jens Secker

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