Purpose
Prevent legal ownership, economic settlement and operational records from drifting apart when exposure changes hands.
Responsibility map
Roles and boundaries
Assignor or seller
Transfers the agreed interest and supplies required documents and settlement information.
Assignee or buyer
Completes eligibility, KYC, consent, documentation and funding requirements.
Administrative agent
Processes a lender-of-record change only after required conditions and evidence are satisfied.
Participant and grantor
Manage their separate economic relationship while the grantor commonly remains lender of record.
Operational sequence
Workflow and controls
Classify
Determine whether the event is an assignment, transfer, novation, participation or other mechanism.
Preconditions
Complete eligibility, consent, KYC, fees and document checks.
Settlement
Coordinate purchase price, accrued amounts and delayed-compensation treatment where applicable.
Effective update
Change the lender register and positions on the approved effective date.
Downstream handoff
Update notices, voting, tax, payment and contact data.
Position logic
Calculations and concepts
Trade amount
The contractual exposure intended to transfer, subject to minimums, hold requirements and settlement terms.
Purchase price
Trade amount multiplied by the agreed price, plus or minus agreed adjustments.
Accrued entitlement
Interest or fees around the effective and settlement dates must follow the transfer documents and market convention.
Risk and quality
Control checklist
- Keep legal, economic and system dates distinct.
- Verify consents and KYC before effectiveness.
- Balance seller and buyer position movements.
- Separate participant reporting from the official lender register.
Exception handling
Common breaks and response
A trade settles economically before the agent makes the assignment effective.
Controlled response: Track the pending legal record and economic settlement separately; apply the agreed interim servicing arrangement.
A participant asks to be added as lender of record.
Controlled response: Do not treat a participation as an assignment; require the applicable transfer process and conditions.
Practical context
Same exposure, different legal path
A lender can sell economic exposure through a participation without changing the facility register. An assignment, once effective, normally changes the lender-of-record position.
Knowledge check
Check your understanding
Does a participation automatically make the buyer a lender of record?Show answerHide answer
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