Derivatives trading has become a highly complex business, with new derivatives products being created frequently.  Each trade must be confirmed by a legal agreement between the parties to the trade within a specified time limit.  With the increase in product complexity has come an increase in the workload of the legal department, whose job it is to create the confirmation contracts.

Our example uses the new xml-based industry standard for describing trades, FpML.  This would typically be generated by a bank's trade capture system once the traders of the two organisations have agreed a trade.  Instead of handing this information to an overloaded legal department, the trade description is fed into the Matching Systems Engine.

The engine collects additional information from the bank's customer database, and then selects those clauses that should be included in the confirmation contract.  Many of the clauses need to be tailored to reflect the specific circumstances of the trade - this is done automatically by the Matching Systems Engine using business rules associated with each clause.

Once the relevant clauses have been selected and configured, the system assembles a draft contract, and makes it available for subsequent refinement and amendment in a standard word processor.  This entire process takes a matter of seconds - a huge improvement in service quality and a big potential saving compared with the use of an over-worked legal department.

The demo

The demo lasts about four minutes - you will need to have the Flash plugin in your web browser to see it, and a high resolution screen (at least 1024 x 768).  We will show you how a contract clause is specified in the system, then how a contract is created to suit a specific derivatives trade.

Click here to start.