Netting and collateral enforceability has been key to the growth of the derivatives markets. However to create a systematic approach for reviewing the enforceability of netting and collateral presents challenges to clients.
Netting has reduced over-the-counter derivatives credit exposure by over 85 percent; without the benefits of netting, banks worldwide might face a capital shortfall of over $500 billion.
An effective netting approach requires an operating model that connects legal documentation, product and counterparty data with legal opinions from the relevant jurisdictions.
D2LT assists client to develop operating models by leveraging enhanced technology and processes (eg netting engines) for determining the enforceability of netting and to review documentation against opinions.
We engage with organisations to remediate areas of concern and to implement new frameworks leveraging technology that is appropriate for them.