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Legal Opinions – it is time to break the cycle of remediation



Legal Opinions – it is time to break the cycle of remediation

By Akber Datoo, Managing Partner, D2 Legal Technology and Michael Wood and Annie Bradwell, Senior Consultants, D2 Legal Technology

With the wave of post-crisis regulatory changes, from EMIR to MiFID II, to Margin Requirements for Uncleared Derivatives and Liquidity Reporting now in place, regulators are placing increasing scrutiny on the way institutions conduct business – and with the significant implications on regulatory capital relief and an IMM Waiver, growing attention is being placed on just how well organisations understand counterparty positions and the ability to treat exposures as net rather than gross. Is the close-out netting and the treatment of collateral against those exposures supported by robust legal opinions? Are they current and is the correct relief being taken? Annual attestations to regulators are not only more detailed, they are being ever more rigorously scrutinised and a few too many prudentially regulated firms are falling short of expectations.

Akber Datoo

Akber Datoo

With too many organisations lacking the ability to correctly link counterparty exposures to legal agreement data, and no processes in place to identify those legal opinions that need to be refreshed, the remediation demands continue to escalate. With firms stuck in a remediate, ignore, remediate again cycle, D2 Legal Technology’s Managing Partner Akber Datoo and Senior Consultants Michael Wood and Annie Bradwell ask just why financial institutions are still not treating the management and refresh of legal opinions as an essential business as usual function.


Many of the remediation exercises that have occurred recently stem from regulators asking auditors to investigate and to report back on the processes being used by banks as part of the regulatory capital calculations, with a focus on close-out netting legal opinions. And this focus will only increase with the focus on the balance sheet and leverage and liquidity ratios, and the impact close-out netting has on them.

In addition to the immediate impact on the balance sheet, if the regulator is not happy about the way legal opinions are used by the institution for capital relief purposes, such failure will also raise concerns for the regulator that the business is simply not being run properly, prompting further, deeper investigation. Certainly, the remediation work being undertaken by a number of institutions should be raising questions as to the way the legal opinion process is managed. Indeed, under current regulation, institutions are required to review close-out netting and collateral enforceability opinions as frequently as necessary to ensure continuing enforceability.

Yet according to a survey conducted by D2 Legal Technology of sixteen leading investment banks, 42% of institutions had no policy regarding the frequency of legal opinion renewal and two thirds were unable to point to a formally approved and detailed process in relation to the management of legal opinions and associated data. Institutions are stuck in a cycle of poorly managed remediation, ignore, remediate again. It simply is not sustainable to continue with poorly defined processes that are not adequately supported by internal systems or data.

Poor process

Where is the Business as Usual (BAU) process for this critical influence on the balance sheet? Of more concern: do those involved in netting decisions fully recognise and understand the BAU significance? The fact that the decision to net on an agreement is a regulatory determinant that affects the overall balance sheet of the organisation is rarely recognised across the full end-to-end process. This is not just a matter for client on-boarding, nor a legal department, nor middle office or regulatory capital financial and accounting. It is a fundamental process impacting risk, finance and treasury functions.

Given its significance to the process, legal opinion management and renewal should, if not already in place, become a BAU function considered across the full end to end counterparty management lifecycle; and that means organisations need to start factoring in opinion refreshes as part and parcel of both BAU function and cost.

Of course, this is easier said than done. Netting and collateral opinions typically cut across the multiple front office product segments, creating difficult ownership and cost allocation discussions. Furthermore, while some organisations have just a few hundred legal opinions, others have many more, in some cases up to 2,000, creating a huge task and substantial staffing resource to keep them all refreshed.

Data consistency

However, there is also a massive gap between those organisations with good legal agreement, opinion and trade linkage data visibility and those without. Institutions with poor or inadequate data in this area have to undertake a huge manual task to identify what netting flags have been set against what opinion – and what therefore needs updating. In contrast, institutions with good systems in place and good legal opinion data capture, know what they are netting on and can immediately pick up any flags, identify the affected opinions and make the necessary changes. Despite the BCBS 239 regulation mandating data accuracy and lineage for such key netting data, it simply doesn’t exist at many firms.

This is nothing but sensible – an institution should be able to look at all agreements, see what opinions are in force, in what jurisdiction and for which counterparty types and products. If there have been any changes, for example to the automatic early termination provisions in an opinion or recovery and resolution regulatory change within that region, by simply polling all agreements it is easy to identify those that need remediation. But for institutions that have not done the systematic data capture transformation, it is an enormously difficult job – and one that far too often is still at the bottom of the pile.

While clearly institutions need to prioritise this activity, and ideally make it a BAU process, respondents in the D2LT survey raised concerns about a lack of industry standards that can be supported by detailed policies, procedures and systems for legal opinion management, especially regarding the determination of counterparty types and products, and problems with a lack of jurisdiction-based taxonomies. This is a fundamental need prior to any automation and move to a sustainable industry approach, perhaps underpinned by the ISDA Common Domain Model initiative.

There are signs of a move towards standardising counterparty types across jurisdictions, which will help in the initial data capture aspect of legal opinions. Certainly, agreements are well mapped, and content is more readily available now in systems than it was ten years ago. Questions such as: ‘What branches are on the agreement?’ ‘Is automatic early termination applicable?’ ‘What counterparty type am I dealing with?’ can all be quickly answered – the key now is to integrate the relevant systems and data flows to the legal opinion and to productionise the entire process – through technology and automation.

Understanding liability

Of course, this cannot be done overnight. Institutions need to have tough conversations regarding costing and priorities. But with regulators providing very clear demands regarding the basis of opinion review, simply ensuring industry opinion records are updated in a more process friendly manner would cover a huge portion of the balance sheet.

But the most fundamental step is to acknowledge there is a requirement to improve the current state of affairs and recognise accountability in the end to end process. In today’s regulatory environment someone within an institution is accountable for the close-out netting and collateral decisions. If a lawyer signs off on the legal opinions that are being relied upon for the IMM waiver, that is a personal liability. If that individual does not understand whether the data representation of the legal opinions is correct, whether all opinions are still current, or that there may be opinions with conditions attached that have changed, how can that individual stand by that decision?

Repeated remediation is not a sustainable strategy. From both a corporate and personal standpoint, it is becoming imperative to satisfy the regulator that netting and collateral opinions are in order and that the proper processes for refresh are in place. Managing and refreshing legal opinions has to become BAU.


Staff training crucial for SME recovery post-COVID



Staff training crucial for SME recovery post-COVID 1
  • 47% of UK’s top performing SMEs provide regular, formalised training for all staff
  • Despite this, 15% of small businesses report to never training staff
  • New findings come as part of an independent, holistic study into small business success, commissioned by Allica Bank to support British businesses

A new study, commissioned by business bank, Allica Bank, shows that the practice of regular training correlates strongly with high performance in SMEs and will be vital to businesses’ prospects of a swift recovery post-COVID. The study analysed data from over 1,000 companies and ranked their success on a scale that evaluated factors including productivity, growth, consistency and outlook.

Post-pandemic, many businesses will be focussing on day-to-day survival; it might be easy to forget long-term planning, of which staff training is a key component. Allica Bank’s findings indicate that small businesses should incorporate training programmes into their recovery strategy to ensure long-term viability. Training will improve morale, retention and boost the company’s credibility.

The study showed that routine staff training is a common characteristic among the most successful SMEs. 47% of the 100 highest scorers on the SME Performance Index provided training for employees at least on a quarterly basis. However, nearly half of all small businesses (46%) only provide training once a year or less, inadvertently hindering their growth and success prospects.

Frequency of training also differed across sectors. 34% of legal businesses provide training for staff once a month compared to just 6% in the hospitality and leisure sector. Whilst there will always be sector-specific disparities, firms in all industries can benefit from boosting and improving their training programmes.

Chris Weller, Chief Commercial Officer, Allica Bank, said:

With so many concerns and barriers for small businesses to navigate in the immediate term, it can be difficult for managers to focus on the training and development of their teams. However, if COVID has taught us anything, it is that adaptability and resilience are invaluable.

“The provision of regular training not only builds these characteristics into teams but serves to maintain a sense of value and togetherness that will boost morale, aide retention and improve performance – all of which contribute to the ongoing success of a business.”

“There is no one-size-fits-all approach to training, but it’s vital for business longevity that staff are supported with a formalised programme of some description. Customers will respond well to a company whose employees demonstrate enthusiasm and competence. Employees also need to feel that their skills are constantly being improved and expanding. These skills will contribute to the success of a company and this will feed through to the bottom line.”

Allica Bank’s SME Guide to Success identified six ‘rules to success’ that were more likely to be displayed by top-performing SMEs compared to their counterparts. The full report contains a wealth of additional data and insight into each of these topics.

As part of its mission to empower small businesses, Allica Bank is making the findings freely available and running a series of free online workshops with relevant partner organisations for businesses to attend.

Aliya Vigor-Robertson, CEO, JourneyHR, the expert partner for Allica Bank’s training workshop, adds:

Staff need direction and the knowledge that they are advancing in their career to stay motivated and engaged at work. An unmotivated, disengaged team is no recipe for long-term success and will ultimately hamper a business. Team members that lack tangible support from above are less likely to identify with their role and its duties, which is a completely natural reaction.

“Regular staff training is a key component of tangible support and will make the team feel secure in their career development. A happy team with purpose and direction will contribute to a thriving business”

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What Is Globalization



What Is Globalization 2

What is globalization? Globalization, or inter-connectedness, is the ever-growing process of integration and interaction among countries, individuals, businesses, and even governments all over the world. Globalization has rapidly accelerated in recent years because of advances in communication and transportation technology. This allows us to be able to get from one country to another quickly and easily. This also allows us to communicate freely use the Internet to connect with our friends and families around the world.

So what is globalization and why is it important? Globalization will benefit many people around the world who are looking to travel more freely, save money on their monthly expenditure, be able to meet new friends and relatives from different parts of the world, learn more about a new culture, and take part in trade and commerce.

Globalization will benefit all of us because there will be more opportunities for everyone to participate in global markets. People in different countries have access to resources, information, and products they wouldn’t have otherwise been able to afford. There are also many opportunities for people to work at home.

Globalization is not just an economic boon, but it can also benefit all of us in other ways. As globalization continues, the boundaries between individuals, states, and countries will become less porous. There will be fewer political conflicts in the world, less violence, and a greater sense of cooperation, tolerance, and peace. These are all positive impacts of globalization.

However, globalization has also created some negative effects as well. It has caused people from one country to move to another to take advantage of globalization. This is also leading to some negative consequences such as a reduction of jobs in some countries. The effects of globalization also include increased competition and unemployment in many countries. Due to this decrease in jobs, wages are dropping.

The only way we can stop globalization is to make sure that we know what it is and what its benefits are. We must understand globalization and its impact on our lives and make sure we are ready to accept the changes that it may bring. if it is inevitable in the future.

The key is to be educated about globalization. There are plenty of books, websites, and television shows that explain how globalization is impacting us and the rest of the world. Globalization is not always bad, but we must be careful not to lose sight of its positives.

In the end, globalization is here to stay, so we must learn to live with it and embrace its benefits. We cannot fight it and try to fight it off, but we must learn to deal with it. And we can do that by educating ourselves. Globalization is here to stay for the long term but we must learn to adapt to it and learn how to live with it.

Globalization can be beneficial for all of us, but it has also caused many problems in the past. There were many cases of unfair trade practices and there was the rise of unfair labor practices. Some people argue that globalization has also reduced the pay of most Americans. So while globalization is definitely not all bad, we should understand that the benefits of globalization are not unlimited. and that we must be willing to give it some limitations and accept some sacrifices.

The biggest benefit of globalization is the ability for all of us to communicate with each other easily. The ability to connect with other people across borders makes it possible to share ideas, information, and knowledge. Since we can communicate with each other, the chances of getting a good price for our goods or services goes up dramatically. and it also allows us to save money by buying in bulk. This also translates to more savings on our end.

As mentioned earlier, globalization has brought about a change in the way people work and live because people are no longer tied down by jobs. They now have the freedom to travel and do what they enjoy.

As globalization continues, there will always be some people who are unhappy with globalization and are afraid to open their eyes to new opportunities that are available to them. But that is okay; this is part of the process of globalization.

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What Is Microsoft Teams



What Is Microsoft Teams 3

Microsoft Teams is an application and web-based collaboration tool that combines chat, videos, online collaboration, document storage, and collaboration with other applications. The service integrates well with the Microsoft Office 365 business solution and features numerous extensions that can integrate well with other non-Microsoft products, like SharePoint. There are many different versions of Microsoft Teams but here are some of the basic functions that all versions offer.

Teams also offers a variety of options for people to create and customize their own groups. This feature provides a way for people to organize their teams within Microsoft Teams. For example, there may be teams for business projects and then another group for personal tasks or social tasks. There are also different types of teams which include teams for social, personal and business.

Microsoft Teams allows users to make lists of files and documents and view them from different perspectives such as in the document viewer or from another Microsoft Teams project. This feature is called “project pane”, and it shows a summary of each of the files in the project. There are also sections for all files in the project that you can see in the “Files” pane.

Microsoft Teams gives users the ability to share information and collaborate on these shared items. A user can create a document that has other people add comments or attach files and then save the document to a list so that other people can view the document in a Microsoft Teams document viewer.

Another feature of Teams is the ability for you to invite other team members to work with you. A user can join a team and then invite other team members to collaborate with the team members who join the team. You can also invite team members to join a new team. When a team member joins a new team, they will be automatically added to your existing teams and the teams will merge together.

Microsoft Teams provides a number of different ways for you to collaborate with others and see the files and documents of others. These include groups and threads in the main document viewer. You can search your files using the search box in the document viewer and you can share your documents with others by email.

Microsoft Teams provides users with a variety of different tools to help you organize and manage your teams. You can assign members to specific teams, assign permissions to members, create custom groups, organize tasks and events, and organize files and documents into groups.

Microsoft Teams can help you build a team and create a collaboration culture that you want to create at your organization. You can use this tool to build effective teams and increase productivity and improve your relationships within the organization. Microsoft Teams offers a variety of options to help you get started and become more productive quickly and easily.

Teams are created easily. If you have several departments within your organization and need to create a team for each department you can do this easily. Teams are made easy and you can get your teams up and running quickly.

One of the best features of Microsoft Teams is the ability to invite people from around the world and let them work with the same documents and projects. You can have the documents and projects organized and shared in the same way throughout the entire organization, regardless of what country they were created in. You can create a similar project in the same language that they were created in and share it with other employees in the organization.

One of the most amazing features of Microsoft Teams is the ability to have multiple team members edit and view the documents and files in the same way. With Microsoft Teams you can have a document and have people edit the same document at the same time without any problems. The changes that you make can also be seen by other team members and can be modified by them without ever needing to send the document again.

Microsoft Teams is the perfect tool for building a powerful and effective collaboration culture. You can share documents and files in the same way that the rest of the organization can view the information.

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