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Smart close-out netting

Author

Listed:
  • Datoo, Akber

    (Founder and CEO and Managing Director, D2 Legal Technology, UK)

  • Clack, Christopher D.

    (Professor, Department of Computer Science at UCL, UK)

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.

Suggested Citation

  • Datoo, Akber & Clack, Christopher D., 2021. "Smart close-out netting," Journal of Securities Operations & Custody, Henry Stewart Publications, vol. 13(3), pages 264-287, June.
    • Handle: RePEc:aza:jsoc00:y:2021:v:13:i:3:p:264-287
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    More about this item

    Keywords

    automation; close-out netting; legal opinions; regulatory capital; risk; standardisation;
    All these keywords.

    JEL classification:

    • G2 - Financial Economics - - Financial Institutions and Services
    • E5 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit
    • K22 - Law and Economics - - Regulation and Business Law - - - Business and Securities Law

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