Legal Data for Banking

Book description

A practical, informative guide to banks’ major weakness

Legal Data for Banking defines the legal data domain in the context of financial institutions, and describes how banks can leverage these assets to optimise business lines and effectively manage risk. Legal data is at the heart of post-2009 regulatory reform, and practitioners need to deepen their grasp of legal data management in order to remain compliant with new rules focusing on transparency in trade and risk reporting. This book provides essential information for IT, project management and data governance leaders, with detailed discussion of current and best practices. Many banks are experiencing recurrent pain points related to legal data management issues, so clear explanations of the required processes, systems and strategic governance provide immediately-relevant relief.

The recent financial crisis following the collapse of major banks had roots in poor risk data management, and the regulators’ unawareness of accumulated systemic risk stemming from contractual obligations between firms. To avoid repeating history, today’s banks must be proactive in legal data management; this book provides the critical knowledge practitioners need to put the necessary systems and practices in place.

  • Learn how current legal data management practices are hurting banks
  • Understand the systems, structures and strategies required to manage risk and optimise business lines
  • Delve into the regulations surrounding risk aggregation, netting, collateral enforceability and more
  • Gain practical insight on legal data technology, systems and migration

The legal contracts between firms contain significant obligations that underpin the financial markets; failing to recognise these terms as valuable data assets means increased risk exposure and untapped business lines. Legal Data for Banking provides critical information for the banking industry, with actionable guidance for implementation.

Table of contents

  1. Cover
  2. Preface
  3. Acknowledgements
  4. 1 The Role of Data in a Financial Crisis
    1. The Financial Crisis – Looking Back
    2. Causes of the Financial Crisis
    3. Systemic Financial Contagion
    4. The Legal Data Consequence
    5. Bibliography
    6. Notes
  5. 2 The Law, Legal System and Basics of Contract Law
    1. Legal Systems and Traditions
    2. Governing Law
    3. Contract Formation
    4. Guarantees and Indemnities
    5. Enforceability of Contracts
    6. Battle of the Forms
    7. Principal and Agent
    8. Contract Law and Important Overlaps
    9. Bibliography
    10. Notes
  6. 3 Structured Finance and Financial Products – Derivatives
    1. Derivatives
    2. Derivatives – Product Families
    3. Derivatives – Asset Classes
    4. Documentation of OTC Derivative Contracts
    5. Close‐Out Netting
    6. Single Agreement Concept
    7. Flawed Asset Provisions
    8. Close‐Out Mechanics
    9. Trade Confirmations
    10. Protocols
    11. Brief Guide to the 1992 ISDA Master Agreement (Multicurrency – Cross Border)
    12. Bibliography
    13. Notes
  7. 4 Data, Data Modelling and Governance
    1. What is Data?
    2. Legal Data Governance
    3. Contractual Taxonomies
    4. Bibliography
    5. Notes
  8. 5 BCBS 239 – Legal Data in Risk Aggregation
    1. What is the Basel Committee on Banking Supervision and BCBS 239?
    2. Typical Implementation Issues to Achieve Compliance
    3. Bibliography
  9. 6 Capital and Netting
    1. What is Regulatory Capital?
    2. Bibliography
    3. Notes
  10. 7 Collateral – Enforceability, Reform and Optimisation
    1. What is Collateral?
    2. Credit Risk Mitigation
    3. Collateral in the OTC Derivatives Context
    4. Collateral Documentation – OTC Derivatives
    5. Brief Guide to the 1995 English Law Credit Support Annex (Transfer – English Law)
    6. MR Collateral Documentation
    7. 2016 ISDA Credit Support Annex for Variation Margin (VM) – English Law
    8. IM Documentation
    9. 2016 Phase One Credit Support Annex for Initial Margin (IM) – New York Law
    10. Bibliography
    11. Notes
  11. 8 CASS – Client Assets and Client Money
    1. The Collapse of Lehman Brothers
    2. FCA Enforcement of CASS
    3. The Current CASS Rules
    4. CASS and Collateral
    5. CASS and Prime Brokerage
    6. CASS Resolution Packs
    7. CASS and Legal Data
    8. Bibliography
  12. 9 Liquidity Risk Management and Reporting
    1. Bank Liquidity
    2. How Much Liquidity Should be Required?
    3. OTC Derivatives and the NSFR
    4. Data and Systems Requirements
    5. Bibliography
    6. Notes
  13. 10 Contractual Impediments – Recovery and Resolution Planning
    1. The Context Behind Recovery and Resolution Planning
    2. Recovery vs Resolution
    3. Normal Insolvency vs Resolution
    4. Main Differences Between EU and Recovery and Resolution Regimes
    5. Single and Multiple Point of Entry Strategies
    6. What Does a Recovery and Resolution Plan, a Living Will, Need to Contain?
    7. US Recovery Plans
    8. US Resolution and Recovery Plans
    9. EU Recovery Plans
    10. Data Requirements of Living Wills
    11. Resolution After Failure of Preventative Tools
    12. The BRRD A55 Contractual Recognition Requirement
    13. Initiatives to Assist with Article 55 BRRD Compliance
    14. Stay Termination Rights
    15. Financial Contract Record‐Keeping Requirements
    16. The QFC Record‐Keeping Rule
    17. Article 71(7) BRRD
    18. Bibliography
    19. Notes
  14. 11 Document Generation/Data‐Driven Contracts
    1. Contract Lifecycle Management
    2. Lifecycle of a Contract and Associated Processes
    3. ECM Solutions Overview
    4. Data‐Orientated Contracts
    5. Further Consideration of the Benefits of Data‐Orientated Contracts
    6. Contract Negotiation Platforms
    7. Standardising Contracts for Document Assembly/Generation Purposes
    8. Legal Agreement Data Extraction
    9. Optical Character Recognition
    10. Artificial Intelligence
    11. Bibliography
    12. Note
  15. 12 Smart Contracts
    1. What is a Smart Contract?
    2. Further Misunderstanding – Ricardian Contracts
    3. How Does a Smart Contract Work?
    4. Distributed Ledger Technology and Blockchain
    5. Centralised, Decentralised and Distributed Networks
    6. Transactions, Blocks, Merkle Trees and Mining
    7. Merkle Trees
    8. Consensus Algorithms
    9. Blockchain Protocols
    10. An Alternative Future for DLT – Hashgraph?
    11. DLT and Smart Contracts
    12. Smart Contracts – Legally Binding?
    13. Benefits, Limits and Risks of Using Smart Contract Technology
    14. Legal Issues
    15. Operational Issues
    16. Learn to Walk, Before You Can Run
    17. Bibliography
    18. Notes
  16. 13 Electronic and Digital Signatures
    1. Wet‐Ink Signatures
    2. Bridging the Gap to Computational and Smart Contracts
    3. Distinguishing Electronic and Digital Signatures
    4. How Do Digital Signatures Work?
    5. Which Law Applies in Respect of the Formal Validity of an Electronic and/or Digitally Signed Contract?
    6. International Legislative Approaches to Digital Signatures
    7. England and Wales – Legislation Regarding Enforceability of Electronic and Digital Signatures
    8. Bibliography
    9. Notes
  17. Appendix A
  18. Appendix B
  19. Appendix C
  20. Index
  21. End User License Agreement

Product information

  • Title: Legal Data for Banking
  • Author(s): Akber Datoo
  • Release date: June 2019
  • Publisher(s): Wiley
  • ISBN: 9781119357162