SaaS Platform Connects Traders with OTC Agreement Data to Optimise Profit and Mitigate Risk
Recommind, a leader in information intelligence launched Perceptiv Derivatives Contract Analysis, the world’s first SaaS platform to provide investment banks with complete and trusted data from their Over-the-Counter (OTC) International Swaps and Derivatives Association (ISDA) agreements.
Perceptiv Derivatives Contract Analysis sifts thousands of counterparty agreements to identify the data traders need to drive profits, including eligible collateral, interest rates, termination events, netting, thresholds and independent amounts. This data gives banks insight into legacy agreements and new client documentation, providing a single trusted “golden source” of information for front office, collateral management, and Treasury and credit risk. It also eliminates error-prone manual processes that can lead to substantial losses. For example:
● Collateral managers get the data they need for collateral optimisation
● The front office price trades more competitively
● Treasury and credit officers have a better understanding of liquidity and the exposures that regulations such as Dodd-Frank, EMIR, and Basel III increasingly require
The application can quickly process volumes of contracts that would take months using traditional methods, eliminating human error and ensuring accurate results. Tier one financial institutions are using Perceptiv Derivatives Contract Analysis to process tens of thousands of legacy credit support annex (CSA) and ISDA master agreements.
“With the immediate risk of financial Armageddon having receded and the global economy showing signs of recovery, the next 24 months is likely to see the financial services industry assimilate post-crisis reforms into business as usual processes”, said Katelyn Brown, Partner, Deloitte MCS Limited. “This will mean an increased focus on data quality and the extraction of terms from counterparty agreements – an area where the industry needs to improve its assurance and understand the opportunities automation can bring to the process.”
Perceptiv Derivatives Contract Analysis manages the following processes for ISDA Agreements:
- Document uploads via a secure connection
- Checking and completing of document metadata
- Automatic collation of original contracts and amendments – creating the chronology extraction of key terms into high extensible data models where the data is structured and normalized
- Review and completion of data via a workflow-driven interface
- Export of the enriched data to the customer’s downstream systems
Once data has been collected, the software’s interface makes searching and reviewing content easy and efficient.
“Due to increased regulatory demands and the huge growth in information, understanding what data an organisation holds is increasingly important. The banking sector is not unlike any other regulated industry, and as banks gear up for an even more stringent regulatory landscape, including Dodd-Frank, Basel III and other regulations, understanding the costs of collateral and optimising capital allocation in an extremely competitive environment is a strategic imperative,” said Jason Williams, Director, Legal, Deutsche Bank, A.G.
According to the Bank for International Settlements’ triennial central bank survey (June 2013), the notional amounts outstanding in the OTC derivatives markets stood at $693 trillion. At the end of the 2013, the gross market value of OTC derivatives, which is the cost of replacing all outstanding contracts at current market prices, stood at $20 trillion.
“Investment banks now hold more OTC contracts than at any time in history, and managing them is harder than ever,” said Bob Tennant, CEO, Recommind. “We are aware of cases where banks have lost between $5 million and $25 million in a single trade after using the wrong interest rates, posting the wrong type of collateral or being arbitraged by counterparties. Perceptiv Derivatives Contract Analysis helps banks to mitigate this kind of risk and allows them to optimize collateral management. It will quickly become the optimal way to analyse OTC contracts.”
Recommind is a leader in information intelligence, delivering breakthrough software applications that harness the power of information to solve concrete business problems. Recommind customers include AstraZeneca, BMW, Cisco, Clifford Chance, Marathon Oil, Morgan Lewis, the U.S. Securities and Exchange Commission (SEC), Swiss Re, the U.S. Department of Energy (DOE), White & Case and WilmerHale. Recommind is headquartered in San Francisco and has offices in New York, Boston, London, Sydney and Bonn, Germany. For more information go to: http://www.recommind.com.