IHS Markit, Allen & Overy and SmartDX have launched a new tech solution to address regulatory challenge in derivatives market.
Margin Xchange is an online platform that covers all stages of the mass re-papering of derivatives contracts required to comply with Initial Margin (IM) regulations. It provides information reconciliation, document generation, negotiation and execution, case management and a full data export.
IM regulations are already affecting around 40 bank groups globally, but that number will explode in 2019 and 2020 as hundreds of new counterparties are brought in scope.
The platform enables counterparties to bulk import and reconcile counterparty data; mass upload and agree their term sheets; generate and customise all IM documents; run all negotiations and drafting; execute by electronic signatures and capture the full audit trail of every negotiation point, internal escalation and sign-off.
Users will be able to record every variable as a data point, rather than text, enabling them to maintain a clear view of progress at every stage during the repapering task. According to HIS this provides higher quality progress reports to regulators and represent the documents as data that can be stored and interrogated in the future with ease.
“Margin Xchange will allow users to achieve the highest standards of risk management and governance in IM, reduce the time and cost of the repapering exercise and maximise the efficiency of negotiations,” said Robin Moody, global head of SmartDX. “More even than that, it creates a new model for how legal documentation could be drafted, negotiated and recorded in the future.”
The platform combines Allen & Overy’s legal knowledge and track record of tech-enabled solutions to meet clients’ biggest, most complex regulatory challenges with the established technology, data and process management expertise of IHS Markit and SmartDX, from Smart Communications.
Darren Thomas, managing director and head of counterparty manager at IHS Markit, added: “When new regulation requires firms to change core terms in trading documents, having a single platform with which to communicate, negotiate and store documents is critical to creating systemic efficiencies and reducing risk.”
IHS Markit provides pricing and valuation services, including independent mark-to-market valuations and risk analytics, for vanilla and exotic OTC derivatives, fixed income cash products, private equity and illiquid debt investments.
Earlier this month, IHS Markit expanded its derivatives valuation services and team in Paris by buying DeriveXperts. The company also recently agreed to help Nordea Bank comply with the European Union Benchmarks Regulation.
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