Allen & Overy, IHS Markit launch tech solution for initial margin regulations

Allen & Overy, IHS Markit launch tech solution for initial margin regulations

The international law firm along with IHS Markit and SmartDX collaborated on Margin Xchange. This is an online, tech-enabled platform that covers the entire process of bulk repapering of derivates contracts mandated by Initial Margin (IM) regulations, including document generation, information reconciliation, negotiation and execution, case management, and data exporting.

David Wakeling, a derivatives partner at Allen & Overy, helmed the development of the platform.

In creating the platform, legal firm Allen & Overy’s experience in creating tech solutions for regulatory challenges was combined with IHS Markit and SmartDX’s track record of experience in data, technology, and process management.

Benefits of the new platform are that it is efficient in terms of time and cost, and handles derivate documents as data so they can be easily managed in the future should the need arise. On the point of documentation-as-data, Paul Cluley, who is a derivatives partner at Allen & Overy, remarks that the platform “marks a defining point in legal documentation.” He goes on to note that although automated drafting has existed for some time, “it is only when we apply technology to every stage of the process, and recognise that a document can be viewed as really just a collection of data points, that we can take a leap forward.”

Moreover, Robin Moody, global head at SmartDX, mentions that the solution also enables users to realise high risk management and government standards. Darren Thomas, managing director and counterparty manager head at IHS Markit, remarks that the platform is, “next generation” and used, “to negotiate complex agreements and to extract structured contract data for downstream consumption into risk systems. 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.”

IM regulations currently affect in the neighborhood of 40 banking groups globally, a number which is forecasted to significantly increase in the coming years, as many new counterparties are brought under the purview of the regulations.

By Elliot Lyons, Research Analyst

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