The Battle for IM Margin Documentation Automation Moved Forward
The September 2019 Uncleared Margin deadline (and the 2020 date) will bring many more firms in-scope for exchanging IM. Both ISDA with LinkLaters, A&O with Markit and SmartDX are in the process of launching platforms to dramatically simplify the process of negotiating and implementing the necessary agreements. The A&O platform was announced in April here, we now have a high level description of the ISDA platform in the attached PDF and description below.
What is ISDA Create – IM?
ISDA Create is an online solution that will, among other things, allow firms to produce, deliver, negotiate and execute documents and capture, process and store data from such documents completely within the solution, thereby providing users with a complete digital record of such documents/data.
The platform will:
- Make the negotiation process more efficient and less time consuming from start to finish;
- Provide powerful commercial, risk management and resource management functions, data and analytics; and
- Remove the need for any post-execution transfer of data from negotiated documentation into internal systems and the chance for error during such a data transfer.
- It will allow firms to automate the creation and delivery of IM documentation, and negotiate and execute IM documentation with multiple counterparties simultaneously. This is all conducted online, while providing flexibility to take one or more of these steps offline if required.
- The system allows standard elections to be made, but also allows firms to customize on a party-by- party basis. There are no restrictions on what parties may agree on a bilateral basis on the platform.
- The system automatically reconciles both standard elections and bespoke provisions exchanged, and flags the differences in an efficient and easy-to-read way.
- ISDA has also invited custodians in the IM space to put their documentation on ISDA Create – IM and intends to put eligible collateral schedules and custodian documentation on the platform.
Benefits of ISDA Create - IM
- The platform will allow parties to embed their standard workflow by allowing approvals of deviations from preferred elections to be requested and recorded through the platform, providing an audit trail.
- The platform will provide a means for parties to communicate internally and externally in relation to an ongoing transaction.
- The data on the platform is stored digitally, and can be pulled into a firm’s internal systems for storage and/or further use.
- Firms will be able to harness and analyze management information and commercial/legal data generated and stored on the platform in a meaningful way.
- The platform is being built with the ability to evolve over time as the needs of the market change.