Banking Solutions. Financial Derivatives Management

Transactions made daily in financial institutions are speeded up thanks to the scanning, centralisation and capture of information contained in the documents involved.

Due to the current economic situation, Financial Institutions opt to focus their efforts on aspects like the treatment given to customers, how they are managing the development of products and finally whether the business is being operated efficiently or not.

Among the possible processes developed in the banks which have a high operational load is the management of the sale-purchase contracts in the financial derivatives market.

Financial derivatives are formalised via contracts, which are aimed at covering risks that may arise in any operation. Like all contracts, it generates rights and obligations to each party and according to the type of asset we are dealing with, the clauses can vary from one to another, prior agreement by the parties. The participants must assume the counterparty risk, derived from the fact that, if one of the parties obtains benefits, the other does not comply with their commitments on the payment date, because no contract has been signed which credits the transaction.

The solution offered by SGAIM centralises the reception at its facilities of the documents which make up the contract via distributed scanning (Fax, mail, etc.). Financial derivative management, via optical character recognition tools and linguistic technologies, automatically identifies the type of document received: Framework agreement (ISDA, CMFO), contract for derivatives, Swaps, Forwards, etc.

Once the document has been classified, the relevant information is then captured automatically for subsequent validation, applying the rules of business depending on whether the bank is the buyer or the seller.

The Business Process Management module included in the solution allows the implementation of the flow of statuses through which the document passes. If any incidences are detected on the document, signature missing, expiry date missing, illegible data, incomplete document, the contract is not in accordance with the negotiation conditions, etc. SGAIM will send an alert, standardised for each case, to the branch or derivatives department to ensure they correct the problem in the shortest time possible.

Benefits of the SGAIM Solution for Financial Derivatives Management

• Reduction in risks of non compliance with the agreement due to the signed document being missing and early detection of delays in the flow of the contractual management process.
• 70% reduction in the cost of managing the contracts.
• Greater speed in contract management, improving the control and monitoring of the contracting process.
• Freeing up of resources which can be allocated to other tasks which contribute greater value to the business.
• Immediate access to any contract.