Recommind launches hosted OTC derivatives data analysis platform
03 April 2014 | 2655 views | 0
Recommind, a leader in information intelligence, today 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, 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 optimization
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 upload via a secure connection
Checking and completing of document metadata
Automatic collation of original contracts and amendments -- creating the c- 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 organization 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 optimizing 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 analyze OTC contracts."