How Contract Discovery and Analytics Technology by Seal Software Can Help Financial Institutions face Dodd- Frank’s Resolution and Recovery Planning Requirements

 

Abstract

8of9, a regulatory solutions company, has reviewed Seal Software relative to its value in meeting the Resolution and Recovery Planning requirements of the Dodd-Frank Act.

 

Leveraging Seal Technology For Living Will Projects

A Living Will is a document produced by large financial institutions, giving regulators a roadmap of how to unwind or recover their businesses in a stressed economic scenario. In order to perform this analysis effectively, banks must have real-time awareness of all of their legal relationships with one another (easier said than done). The information gathering process is highly manual, complex, and overwhelming. Seal Software, headquartered in San Francisco, has developed cutting edge technology in contract discovery and analytics that accelerates access to critical contract information buried within unstructured contractual documents. This has enabled organizations to uncover key terms that could dramatically impact their business, empowering them to take informed action or respond to time-sensitive (regulatory) requests. 8of9 has reviewed Seal’s technology with respect to financial derivative contracts as a whole, but has recently considered the value proposition of using Seal technology on Living Wills projects to identify where and how using Seal can make the process more efficient.

 

Background on Resolution and Recovery Plans (“Living Wills”)

The 2008 financial crisis and ensuing civic criticism of Wall Street stirred regulators to reflect on the causes of the economic turmoil and develop ways to stabilize immense financial institutions to safeguard the world’s economy. The demise of Lehman Brothers in particular proved the potentially hazardous entanglement amongst financial institutions. Regulators and lawmakers determined that one of the largest obstacles to preventing the collapse was the inability of regulators and bankruptcy courts to wind-down banks in the event of economic turmoil without significantly impacting Main Street. These events prompted the Financial Stability Board (FSB) of the G-20 to declare in September of 2009 that “all systemically important financial firms should develop internationally-consistent firm-specific contingency and resolution plans to help mitigate the disruption of financial institution failures and reduce moral hazard. US Lawmakers responded in the 2010 Dodd-Frank Act by requiring each systemically important financial institution (“SIFI”) to create and submit to regulators a Resolution and Recovery Plan (“RRP”), colloquially dubbed a “Living Will.” Section 165 of Dodd-Frank obliges covered companies to submit an annual RRP to the Federal Reserve Board (“FRB”), the Federal Deposit Insurance Corporation (“FDIC”), and the Financial Stability Oversight Committee (“FSOC”, and together with the FRB and FDIC, the “Agencies”).

 

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