Credit Messaging Layer

Purpose

The Credit Messaging Layer handles all pre-trade and trade-execution workflows in Module 2. It is the interface through which borrowers and lenders discover counterparties, negotiate terms, and execute credit transactions.

Components

Parthenon Credit Matching System (PCMS)

The PCMS is the primary origination engine. It operates as an RFQ (Request for Quote) system where:

1

Borrower submits an RFQ specifying: desired principal amount, preferred rate range, tenor, collateral type and amount, and LTV parameters

2

PCMS broadcasts to eligible lenders — only Known Lenders who match the collateral type and jurisdictional requirements see the RFQ

3

Lenders respond with quotes — specifying their offered rate, any modified terms, and capacity

4

Borrower selects a quote — or PCMS auto-matches based on best-rate-first priority

5

Term Sheet is generated encoding all agreed parameters

The PCMS respects Canton Network's sub-transaction privacy: borrower RFQs are visible only to eligible lenders, and individual quotes are visible only to the borrower and the quoting lender.

Term Sheet Parameters

Each matched transaction generates a Term Sheet with the following parameters:

Parameter	Description	Example
Settlement Asset	Loan denomination currency	USDC
Principal Amount	Loan size	5,000,000 USDC
Base APR (Fixed)	Locked interest rate	850 bps (8.5%)
Tenor	Loan duration	90 days
Collateral Type	Asset posted as security	BTC
Initial LTV	Required collateral ratio	50%
Margin Call LTV	Threshold triggering margin notice	70%
Liquidation LTV	Threshold authorizing custodian liquidation	85%
Cure Period	Time to restore LTV post margin call	48 hours
Custodian	Qualified custodian holding collateral	BitGo Bank & Trust
LPT Transferability	Secondary market trading rights	Known Lenders only
Governing Law	Applicable legal jurisdiction	England & Wales (ADGM)
Oracle Source	Price feed for LTV monitoring	Chainlink + exchange TWAP
Protocol Fee	Platform infrastructure fee	10 bps

All parameters are locked at origination and encoded in the Loan Position Token. No unilateral adjustment by borrower, lender, or protocol.

Orderbook (Secondary Market)

For standardized credit products and existing LPTs, Module 2 operates a Central Limit Order Book (CLOB) enabling:

• Price discovery — transparent bid/ask pricing for Loan Position Tokens

• Secondary trading — lenders can sell LPT positions to other Known Lenders

• Liquidity — continuous market-making for credit positions

• Portfolio rebalancing — credit funds can adjust exposure without unwinding underlying loans

The orderbook is permissioned: only Known Lenders can place orders, and all transfers require the transferee to have completed KYC/AML and executed the GMSLA.

Workflow: From RFQ to Execution

1

Borrower submits RFQ

2

PCMS broadcasts to eligible lenders

3

Lenders submit quotes

4

Borrower selects quote → Term Sheet generated

5

Borrower deposits collateral with Custodian

6

TICS confirms collateral encumbrance

7

LPT minted on Canton (co-signed by Custodian)

8

Principal transferred to Borrower via atomic DvP

9

Loan is live — monitoring begins

Privacy Considerations

Canton Network's sub-transaction privacy ensures that:

• RFQ details are visible only to the borrower and eligible lenders

• Individual quotes are visible only to the borrower and the quoting lender

• Executed loan details are visible only to the borrower, lender, custodian, and platform

• Secondary market trades are visible only to buyer, seller, and custodian

• No global state means competitors cannot observe positions, strategies, or pricing