The Over The Counter (OTC) Derivatives market is underpinned by bespoke bilateral agreements that govern the terms of trading.
The importance of this market to the global economy came into sharp relief during the financial crisis when the complex web of interdependencies and in particular counterparty risk was exposed by the failure of Lehman Brothers and near failure of a number of other key banks.
One of the key aspects of this is in unlocking the contractual terms tied up in millions of paper-based contracts, terms which are designed to remove legal uncertainties and provide mechanisms to mitigate counterparty risk.
Trading environments require up-to-date, accurate information while regulation has forced financial institutions to provide better protection against counterparty risk and increase the transparency of their contracts.
Banking requirements vary widely from trading agreements through to orderly crisis resolution, client segregation and protection against proprietary trading.
Unreliable data continues to cost banks Millions in mis-priced trades, dispute resolution and ongoing operational effort.
All industry sectors rely on contract and document based data, tied up in image based scans.
The challenges of up-to-date, accurate data are the same for insurance and pharmaceuticals as for banking.
While technically possible, most organisations have not yet moved to a paper free world, with ‘wet-ink’ signatures still prevailing as the most common mechanism for contractual agreements.
Being able to use a single view across digital formal and image (paper) format is essential for operational efficiency.
Solution: Introducing Lyncs
Lyncs is offered as a complete service, combining our automated data collection technology, domain expertise and rigorous capture, review and quality assurance to provide our clients with certainty of outcome. The service can scale from small engagements with clients looking for a turn-key solution, through to enterprise wide installations. Many solutions available on the market offer only a subset of any clients needs; we can cover them all. Our platform can be used to view your one-off, but highly important documents alongside your high volume industry standard agreements.
A purpose built data extraction platform capable of processing any document
Unique validation and data capture features along with side by side data linkage provide trusted data
Consumable data can be analyzed using beautiful, interactive reports, or clients can overlay business intelligence tools on the reporting database for complete flexibility
A purpose built Application Programming interface provides simple but powerful integration, alongside schedule data exports
Logical Construct selected for RegTech 100 2019
Initial Margin Deadlines Looming With the next phase of the Initial Margin (IM) for uncleared derivatives in progress, increasing numbers of market participants will need to comply over the next 3 years. So far, only the largest sell-side banks have implemented, but more market participants with less pre-existing infrastructure will be caught by phases 3 Read more about Logical Construct announces support for Initial Margin[…]
The legal industry is ripe for an injection of modern technology and that has not gone unnoticed by myriad start-ups all vying to bring the revolution. Creating better ways of doing things is often the easy part; the culture shift required for adoption is much harder, particularly when dealing with a profession steeped in tradition. Read more about The future of financial contract documentation[…]
Thomson Reuters has teamed up with Logical Construct to help global financial institutions gain visibility into the key legal and economic terms and risks hidden within their legal documentation with a full-service contract data management solution.
“Many financial services companies still face the daunting challenge of accessing data that lies buried in image-based scans of contractual documents,” said Luke Trigg, Managing Director, Logical Construct. “We are excited Thomson Reuters is collaborating with us and leveraging our platform to round out its industry-leading legal managed services for the benefit of global banks and other financial institutions.”
Still sprinting for finishing line of Uncleared Margin Reform? Hope you are keeping good records!
With the banking regulation spotlights focused heavily on uncleared margin reform (UMR) for the last 6 months, you might not have noticed the latest Bank Recovery and Resolution Directive update on record keeping for financial contracts coming into law in October 2016, requiring banks to maintain specific, minimum records on their financial contracts.
Logical Construct launches Variation Margin data capture solution to help banks meet the uncleared margin reform deadlines.
If you value the accuracy of your data and want to do something better in less time, come and talk to us.
Margin reform regulation requires non-cleared derivatives users to repaper their ISDA documentation.
Vendor offerings exist to address client outreach through renegotiation, including smart, rule driven solutions that cover document assembly and metadata recording at point of authoring.
Few are addressing how this co-exists with legacy documentation, or allows new documents and contracts authored elsewhere to be captured.
Industry utilities are fast becoming the new reality in the post financial crisis banking arena, with Know Your Client (KYC) and Collateral Management initiatives already in progress. The main driver behind this utility model is improved operational efficiency and the associated cost savings, yet many large financial institutions have yet to break through the misconception that ‘inside the firewall’ is always safe and ‘cloud’ is always bad.
The EU regulation on securities financing transactions requires new disclosures for collateral that can be reused to provide additional awareness of the risks that this can cause to collateral providers with complex collateral ‘chains’ (see Article 15).
In early March the European Banking Authority (EBA) published a consultation paper outlining draft regulatory standards for the minimum set of data that institutions should hold on their contracts within the European Union.