Smart close-out netting

Akber Datoo and Christopher D. Clack
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Akber Datoo: Founder and CEO and Managing Director, D2 Legal Technology, UK
Christopher D. Clack: Professor, Department of Computer Science at UCL, UK

Journal of Securities Operations & Custody, 2021, vol. 13, issue 3, 264-287

Abstract: Smart close-out netting aims to standardise and automate specific operational aspects of the legal and regulatory processes of close-out netting for prudentially regulated financial institutions. This paper provides a review, analysis and perspective of these operational processes, their benefits for prudentially regulated trading institutions, their current inefficiencies, and the extent to which they are amenable to standardisation and automation. The main concepts of smart closeout netting are introduced, including the use of a controlled natural language in legal opinions and the use of a data-driven framework during netting determination.

Keywords: automation; close-out netting; legal opinions; regulatory capital; risk; standardisation (search for similar items in EconPapers)
JEL-codes: E5 G2 K22 (search for similar items in EconPapers)
Date: 2021
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Persistent link: https://EconPapers.repec.org/RePEc:aza:jsoc00:y:2021:v:13:i:3:p:264-287

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