There is Life after LIBOR
by Marketing Team | May 04, 2020
The dreaded time is approaching. The LIBOR benchmark interest rate is set to expire in 2021. This poses tremendous challenges for contract managers as LIBOR is embedded into almost all financial contracts with a variable interest rate component.
This means that all contracts containing references to LIBOR will need to be reviewed and amended (a process called repapering) – while evaluating the consequences that LIBOR’s discontinuation and the transition to alternatives may cause. It is an enormous and costly endeavor for all financial institutions.
Cognitiv+ deep learning technology can improve the repapering process, guaranteeing accuracy, facilitating interpretation of contract clauses, and mitigating financial and legal risks. Cognitiv+ manages risk in 5 dimensions ensuring full visibility and guaranteeing that nothing is missed.
Cognitiv+ utilizes a filtering process for all contracts to ensure that relevant documents are identified, analyzed and presented without time-consuming legal processing. It also flags contracts that do not require processing because they would terminate by the end of the 2021 deadline.
Handles Many Formats
LIBOR has been incorporated into many types of contracts and documents, which may have been stored in different formats: PDFs, Word Docs, even jpgs or pngs. With Cognitiv+ technology, every document is broken down into sections and converted into HTML to enable processing and annotation. This helps ensure that the final version of the new re-papered contract is clean and readable.
Intelligent LIBOR identification
All mentions of LIBOR are extracted with the help of a natural language processing model. If the agreement actually has a back-up for the discontinuation of LIBOR, but it is not explicitly mentioned, Cognitiv+ is able to identify the particular section(s) that refer to LIBOR.
Make Amendments at Scale
After identifying all instances of LIBOR in the documents, Cognitiv+ will identify each clause in order to add alternative reference rates like SOFR or SONIA.
Cognitiv+ automatically extracts a list of provisions that indicate what would happen in the event of a LIBOR rate discontinuation. Together with the automatic definition extraction, Cognitiv+ helps financial institutions interpret the context and assess the consequences of LIBOR discontinuation within the general framework of the agreement.
Providing a clear Audit Trail, Cognitiv+ saves and visualises all version changes and amendments with a time-saving traffic-light system that also displays redlines. It also enables all authorized parties involved to collaborate on a project.
Customization and Integration
Clients can amend, add or develop their own models to apply to their own documents.
We offer an API that will seamlessly integrate with your DMS or ERP to find and process your documents, send them back, and recycle them if a new version is provided to review.
We know too well, from experience, that in the process, repapering can easily spiral out of control.