Earlier this month, we attended ISDA’s Technology Forum. Of special interest was a session titled Documents, Data and Digitization: a discussion between a panel of expert lawyers moderated by ISDA’s General Counsel, Katherine Darras.
Given we have our own cutting-edge digital document product, Opal, we were eager to learn about the progress being made by ISDA and the wider industry on bringing derivatives documentation into the 21st century.
If you’re involved in producing contracts, confirms, and other types of documentation, here are a few updates and insights from the session worth keeping an eye on:
The Importance of Unlocking Structured Data
At Vox FP, we strongly believe that there is key data—structured data—held inside contract documents that we need to unlock. Much of the conversation around digital documents has focused on advanced machine-learning solutions to revisit legacy documentation, but there’s enormous value in ‘future-proofing’ contracts and other client documents by digitizing their creation and capturing the essential data elements as part of that process.
We were pleased to hear the panel echo the importance of treating key elements of contracts as structured data, and encouraging session attendees to prioritize finding ways to unlock that data as well as to create and manage contracts digitally.
New ISDA Initiatives
ISDA shared several exciting initiatives they’ve been working on:
- First, they mentioned there is a “Master Agreement User Guide” coming out which will target non-lawyers (e.g. tech, ops, and risk teams) who need to understand and work with MAs.
- Second, ISDA shared that they have formed a new “Legal Technology Working Group” whose first order of business is to produce a Clause Library (standard set of clauses) for the ISDA Master Agreement.
- Finally, ISDA introduced their “ISDA Create – IM” product which is in development, and which will provide a web-based tool to simplify negotiation of agreements for Initial Margin collateral.
We believe the Clause Library has the potential to be a useful tool for the industry by streamlining the negotiation of standard documents (always a good thing!). ISDA Create looks nicely put together, but the challenge of getting a new software product actually used is not to be underestimated. ISDA Create needs both counterparties to use the platform to get its real benefit, and it’s limited to one type of contract at the moment. We believe there are a number of contracts and a long tail of low-sophistication clients who still need to be serviced outside of ISDA Create. With that said, we believe the introduction of the tool, even with its current scope, will help move the industry in the right direction.
One panelist used the phrase “tech-enabled contracts” to describe the new wave of digitized documents. It’s not a phrase we use in-house, but as this movement picks up speed, it’s one we might borrow – perhaps to differentiate from blockchain’s Smart Contracts.
Why Will This High-Tech Approach Succeed?
An anonymous audience member asked a question that we were interested to hear answered: Why will this high-tech approach succeed when many in the industry are yet to adopt something much simpler, like eSignature?
The panelists answered as we would have: because it has to. The cost, risk, scale, and complexity of the documentation challenge with looming industry changes like Brexit, Initial Margin, xIBOR, FINRA 420, and more surely means we can’t continue to have so many hands on the process. Banks need a streamlined and automated system for creating documents in bulk, storing them digitally, and accessing their key data elements if they’re going to keep up with these fast-moving regulatory scenarios.
As regulatory change management consultants and software providers, we live and breathe document digitization. It’s why this session was of particular interest to us.
Earlier this year, we launched Opal: Repaper, a lightweight, easy-to-use application that helps financial services institutions repaper their clients more quickly and efficiently through bulk automation. Some things to note as you consider digitizing your documents:
- Opal: Repaper has been built on top of Microsoft Word’s negotiation capabilities to accommodate any kind of contract. It uses the familiar Word user interface and generates standard Word documents, making it accessible for all of a bank’s clients and their legal teams.
- The application allows users to develop custom templates for different agreement types and has an open API for integration into existing enterprise workflows.
- Opal: Repaper also has a dashboard to show real-time progress of each repapering exercise—an enormous asset for senior management.
You can learn more about Opal: Repaper here. If you’d like to explore using the software in your organization, get in touch and we’d be happy to give you a demo and discuss your organization’s specific needs and use cases.