New offering enables firms to more accurately price credit risk and effectively optimize collateral
eClerx, a leading provider of knowledge and business processing to the global financial services industry, today announced the launch of its ISDA Credit Support Annex (CSA) Document Risk Review solution that allows financial institutions to strategically mine information comprehensively and accurately from CSAs for more informed management of credit and legal risk, optimization of cash and collateral, and operational risk mitigation. Firms can leverage the data pre-trade to ensure derivative trades are priced correctly, and post-trade to optimize collateral movements across counterparties.
As a result of regulatory mandates such as Basel and Dodd Frank living will requirements, as well as the increased demand for collateral due to OTC clearing, the information in ISDA CSA documents has become critical to firms’ credit risk management and planning. On average, more than 65% of agreements contain discrepancies when compared against representations in client systems. By leveraging eClerx’s ISDA CSA Document Risk Review solution, users gain access to information clients have legally agreed to but do not have the ability to systematically act upon, due to the unstructured nature of the information embedded within faxed PDF documents and image files.
“The industry is challenged by the complexity of screening the data in their ISDA CSA documents,” said Mahesh Muthu, Associate Principal at eClerx. “Our new ISDA CSA Document Risk Review solution will allow firms to utilize that information through eClerx’s strategic decision analytics facilitated by a metrics and analytics suite. By engaging with a third-party expert, financial institutions can leverage the toolset and processes already developed and mastered, allowing their internal teams such as legal, credit valuation adjustment (CVA) trading desks, and treasury, to focus on optimizing day-to-day decisions with a more accurate, granular dataset. With pending regulations, firms need to ensure they have a comprehensive solution in place to remain competitive while managing costs.”
The ISDA CSA Document Risk Review offering provides clients with:
- Electronic, usable records of agreements which can be mapped and reconciled to client systems or used as a golden source repository, facilitated by a system based dual capture and audit methodology
- An operational reporting suite summarizing discrepancies between systems and electronic CSA records, benchmarking against industry standards and portfolio averages, and isolating legally unenforceable documentation
- An analytics suite customized for various consuming departments, such as client on-boarding, legal, credit valuation desk (CVA), credit risk, operations and liquidity management
In addition to the new product, clients will also have access to eClerx’s existing preâvalidated capture forms, taxonomical database and data capture rule set, as well as an operational reporting suite to govern the process and analytics suited to each consuming department within a financial firm.