Case Study: Derivative Docs Electronic Capture and Analysis | Clutch Group

News & Insights

Case Study: Derivative Docs Electronic Capture and Analysis

Scope of services

This was a new engagement from a document capture perspective but for an established client; one of the largest financial services providers in the world.  Initially we devoted a large amount of time to truly understanding the clients’ regulatory concerns and how they manifest with regard to their documentation storage and indexing – before developing a solution.

Context and description

Dodd-Frank and other recent regulations meant that our client required a greater understanding of its OTC derivative environment; to be able to extract clauses on a risk basis; categorize and report for legal and regulatory risk but also things like type and geography; to do this in real time.

Particular issues pertaining

  • This piece of work had to be completed extremely quickly to avoid regulatory censure and to a very high accuracy level – for which we were directly accountable.
  • The documentation was complex and the number of separate data points to be accommodated (and therefore the potential reporting obligation) was also very high.
  • There were over 100,000 ISDA related agreements in total.
  • The end solution had to integrate with downstream systems.

Solution

We deployed Capture.IQ for processing, storage and reporting, minimizing expensive intensive labour.  Each rule set had to be carefully considered to maximize data capture and enable robust analysis and reporting – as is often the way we start with a base but what we develop is client bespoke.

We have extensive regulatory remediation experience and leveraged this in developing the technology and also the overall process.  We created a structured, secure, searchable Client Data Repository.

We were directly accountable for quality and accuracy and employed a two stage process featuring a strong people expert component as well as technology.

Outcome in cost savings and time…

  • Programme completed in 6 months (as opposed to 2 years estimated)
  • Cost savings of £1m against more traditional people based approach

Long term benefits…

  • Accuracy level of 99.6%
  • Ongoing, near real-time processing for new documents (increasing productivity and customer service)
  • Reporting and analytics element enables greater risk management e.g. quickly establish riskier clausing or geographic and sector exposures
  • All reference data is then rapidly integrated into downstream banking systems, allowing traders to more efficiently and more effectively analyse and understand their derivatives portfolio
  • The responsive and transparency facilitated here gives confidence from a Regulator perspective and enables the rapid updating of documentation
Share: Facebook Twitter LinkedIn

Sign up for the Clutch Newsletter:

Download the 2017 Regulatory Highlights Report

Trends in Financial Regulation, Supervision, and Enforcement

Clutch tracks 2017’s key global developments across the financial services industry to identify legislative issues, regulatory initiatives, supervisory priorities and enforcement trends in the midst of an evolving economic and political landscape.

Download Report