Here are two ways that new technologies can assist with simplifying processes involving International Swaps and Derivatives Association (ISDA) agreements.
1. Assistance with review analysis of legacy contracts
Often Investment banks will have a repository of tens of thousands of Master Agreements and Schedules relating to international swaps and derivatives transactions (ISDA agreements). Small changes to the circumstances in which these transactions can take place may mean that all these have to be reviewed and analysed to determine whether any of them need to be redrafted. Without assistance of technology to automate this process it could be an extremely laborious and time-consuming task and one almost impossible to complete without error.
Luckily there are solutions available that assist you in this painstaking process. For example, solutions such as KReveal (as part of http://KMstandards.com) and Seal Software use a combination of natural language processing and machine learning techniques to extract contractual terms, clauses and provisions where required. This technology will allow for quick identification of those clauses that need to be amended.
2. Document assembly and approval of new agreements
Once the relevant contracts and terms that need to be amended have been identified you can use technology that allows you to amend them easily and configure the route through which they are to be approved. It has been said that ISDA agreements don’t lend themselves to document assembly because of their tortuous internal logic and interdependencies between clauses.
The typical process in a bank today is that an ISDA agreement is requested by the front office by means of an email or an online form. Usually, this is incomplete so the documentation team needs to go on a detective trip for the information needed to determine which particular wording and form of agreement needs to be used. Sometimes the correct form of agreement is created by ‘find and replace’ or ‘cut and paste’ methods which are prone to error. Even after all the data is collected, negotiation and approvals workflows are complex. Risk, credit and compliance teams all need to be involved – not to mention the other party to the negotiation.
Good document assembly technology will automatically create the required contract form and input all the correct data. It will also allow for any approval route to be configured and automated regardless of how many actors there are in a bank’s approval chain. This process is a much more efficient and accurate method for contract document assembly.
ContractRoom (www.contractroom.com) is one such software that can be used for this sort of document assembly and workflow routing.
So there you have two ways that different technologies can assist simplifying how your financial institution deals with ISDA documentation. What are your thoughts? How does your institution deal with these types of agreements and what approval processes does it follow? Are these processes effective?
To find out more about how ContractRoom may be able to help you with the assembly and approval workflow ISDA agreements please go to www.contractroom.com and book a free demo.