Fused: Allen & Overy launches client derivatives app after Neota collaboration

Allen & Overy has released a new application built in the Neota Logic platform to help a swathe of financial institutions work out if they are affected by the final phases of onerous changes to over the counter (OTC) derivatives regulations.
marginMAPP, which is said to have resulted from Neota’s participation in A&O’s tech incubator Fuse, is a client facing tool designed to help entities determine whether phases 4 and 5 of the global initial margin (IM) rules apply to them in the first place or if one or more ruleset applies.
The latest wave of regulation spreads the net on the number and size of financial entities that must allow for the higher capital requirements imposed by the IM regulations, which come into effect on September 2019 and 2020. This is in response to the financial crash of 2008-09, which was caused by unregulated derivatives activity.
The International Swap and Derivatives Association (ISDA) has said that complying with the new regulations will generate an “untenable rush” on resources and require “significant operational and technology builds that must be undertaken to meet the swell of demand” which will otherwise affect entities’ ability to trade. The first phases of the regulation affected larger, and in many cases better resourced institutions. Changes to the regulations has already led to a number of creative approaches by law firms to cut the time it takes to ensure the right systems, processes and documentation are in place.
Emma Dwyer, a capital markets partner at Allen & Overy commented, “There is a lot of uncertainty about whether IM rules will apply to our clients, and profound effects on their business if they do. Being able to speed up this process by giving specific, tailored advice is paramount. Not only does it free up our lawyers but also enables our clients to be served answers immediately, at any time.”
Any entities just assessing if they are affected by the regulations are already running behind the recommended timeframe: in July ISDA published a paper saying they needed to devise a strategy “immediately.”
marginMapp is said to have been facilitated by allowing internal stakeholders at A&O to work closely together with the magic circle firm’s legal tech team and Neota within Fuse, which Neota joined last year. However, it is not the first collaboration: in November 2017 aosphere, A&O’s online legal subscription business, launched three Neota-based RegTech apps to help financial services clients reduce risk.
While Fuse is largely for startups, A&O describes it as a ‘collaborative tech innovation space’ including more established vendors such as Kira and iManage, and HighQ.
If you are an established vendor, let us know if you would participate in an incubator: caroline.hill@liti.co.uk