Investment Operations

OSTTRA APPLIES AI TO DIGITIZE PAPER CONFIRMS FOR OTC DERIVATIVES

ChatGPT Artificial Intelligence for Corporate Actions

OSTTRA has confirmed the launch of a paper digitization solution that it says enables market participants to reduce the amount of time it takes to process paper confirmations for complex over-the-counter (OTC) derivative transactions from hours to minutes. According to a statement from the company, it is available for FX options and equity swaps from this month, and then fixed income options, commodity swaps and non-deliverable forwards (NDFs) from September.

Analysts say the new solution is a significant enhancement to the existing paper trade workflows for investment managers on OSTTRA Trade Manager, automating trade review and matching processes to achieve faster confirmations. With tens of thousands of OTC trades still captured on long form paper, reviewing trade details, terms and conditions is an arduous task for all firms, resulting in significant operational cost and risk.

According to the company, the enhanced solution uses artificial intelligence (AI) to extract and digitize critical details from pdf transaction records, such as the notional value of a swap or strike price of an options contract. Creating this digitized representation of the trade is critical to automating onward processing and reducing the risk of human error in reviewing or transcribing these complex transactions.

“Historically, the time it takes to process and confirm a paper OTC trade can take days and in some cases weeks,” said Umniya Ahmed, executive director for Investment Management strategy at OSTTRA. “No two documents have the same legal structure – which presents a major headache to a typical investment manager dealing with multiple counterparties and numerous instrument types,” he continued. “Our solution uses AI to adapt to any type of paper transaction, irrespective of length or format. By adding a paper digitization element to Trade Manager, Investment Managers will be able to process the more intricate derivatives transactions alongside their existing electronic trade flow – allowing them to monitor all their OTC trades in one place,” Ahmed concluded.