Conference Notes

BEFORE YOU START: EXISTENTIAL QUESTIONS

• What *is* automation?
• What problem are you trying to solve? Is automation necessarily the best answer? Are you really just after better ORGANISATION?
  • Cost
  • Speed
  • Scale
  • Business Process
  • Consistency
  • Quality
  • Reporting
• What other enterprise technologies do you use: whether you’re ready for automation will depend on what you already have:
  • Information retrieval/Search
  • Collaboration/social
  • Process Management/Audit/Controls

HOW YOU MAKE THE DECISION TO AUTOMATE

• What should you automate? Suitability Criteria to consider
  • Expected Volume
  • Time taken to prepare manually
  • Degree of Standardisation
  • Susceptibility to change
  • Degree of Negotiation
  • Substantive complexity
  • Formal Complexity
  • Length
• Optimisation: How much influence do you have over Suitability Criteria? Can you optimise the success of automating? Where you can, you should.

PREPARATION

• Institutional Attitude: How much autonomy does your institution let users have? Answer: likely, not very much
  • Information Security (confidentiality): how comfortable are you with “the cloud” and the “crowd”? (likely answer: not very)
  • Information Technology: (system robustness): how much tolerance for “breakdown”?
  • Governance: what restrictions in terms of architectural integrity, procurement, consistency, quality:
  • Politics:
    • Systems: simply put, IT departments want to maintain control of gizmos.
    • Content:
• Optimisation (as per above): are your documents ready for it?
• Content Policy
  • These are the underlying rules your automation will need to cleave to.
  • If not agreed, very hard to successfully automate.
• Negotiation Procedure
  • Who will use the automation system? How much will it be used?
  • Integration:

RESOURCING It isn’t just about buying software.

• Tools
  • Which application? Will depend on your needs and your organisation
    • Inside/outside the firewall
    • User interface
    • Degree of integration with existing firm systems
    • A brief interlude: The End-to-End Principle insofar as it relates to your organisation
• Personnel
  • Status: Employees versus contractors
    • Fancy telling permanent staff you hired as derivatives experts that the next six months will be spent programming a machine?
  • Attributes: Lawyers versus IT analysts versus Management Consultants: you need to bring to bear a good understanding of:
    • Content: the market and the content of the documents: what they mean and how the document works
    • Data Structure: optimising the text and data model for maximum simplicity and flexibility. This is HARD.
    • IT structure: it helps to have some idea or interest in how data is actually processed by machines (xml, html, etc)

IMPLEMENTATION Degree of automation: Depends on the type of document.

• The more negotiated a document is, the less value there is in automating a final complete agreement
  • For an ISDA that will be negotiated, an 80% complete document which captures the non-controversial text will be almost as valuable that a fully complete document.
  • For a high-volume structured note, more important to have the whole thing automated.