Dodd-Frank Compliance

Fenergo’s Enterprise Compliance Platform supports the implementation of the Dodd-Frank rules framework for capital markets and investment banks

US Dodd-Frank Wall Street Reform 

Fenergo’s Enterprise Compliance Platform supports the implementation of the Dodd-Frank rules framework for capital markets and investment banks.

The Fenergo solution ensures that all relevant counterparties are correctly classified for the External Business Conduct rules and Swap Documentation requirements. This further ensures that all transactions that take place on the underlying accounts are compliant, empowering financial institutions to set trading restrictions on non-compliant accounts.

As part of the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act), which seeks to reduce risk, increase transparency and promote market integrity, market participants are mandated to obtain and store certain reference data attributes and regulatory documentation for all trading counterparties across FX (Forwards, Swaps, NDFs, Non-Deliverable Options NDOs and Options).

Dodd-Frank Compliance for Pre-Existing Accounts

To ensure compliance with Dodd-Frank, every financial institution will need to examine all pre-existing accounts to ascertain if their current legal documents with all counterparties sufficiently reflect the terms of the Dodd-Frank legislation. If these documents do not reflect the obligations demanded by Dodd-Frank, they must be updated accordingly.

The Fenergo Enterprise Compliance Platform ensures continued compliance with Dodd-Frank regulations by supporting banks in updating their legal documentation across all counterparties with which they trade. Specifically, the Fenergo Compliance Platform ensures Dodd-Frank compliance by:

  • Classifying counterparties through the provision of pre-configured rules for document requirements based on the type of counterparty that the bank is dealing with (e.g. Swap Dealers)
  • Tracking the individual counterparty activity on a document matrix dashboard to address the new terms and conditions of its engagement
  • Guiding the user through its rules-based workflow to undertake the corresponding activity and manage the interaction through counterparty correspondence.

At the end of this process, many financial institutions may need to revalidate pre-existing accounts by performing Know Your Customer Due Diligence processes to ensure that legislative strands are being addressed. Fenergo’s Customer Due Diligence / Know Your Customer (CDD / KYC) solution is pre-configured with specific rules pertaining to Dodd-Frank compliance to ensure that banks’ engagements with counterparties comply fully and wholly with the legislation.

Dodd-Frank Compliance for New Counterparty Onboarding

When onboarding new counterparties, the Fenergo Enterprise Compliance Platform classifies each counterparty before undertaking a full CDD / KYC review of the counterparty. Counterparty classifications include:

  • Swap Dealer  (Manual and Automated)
  • Major Swap Participant
  • Financial End User
  • Special Entity
  • Commercial End User.

Once the initial classification is complete, the Fenergo Client Onboarding Lifecycle Management solution seamlessly manages the full onboarding of the counterparty, efficiently handling and processing all data, document evidencing gathering and margin classification for all counterparties. IT also interfaces with necessary external systems to gather counterparty reference data.

Three key pieces of data will determine the course of compliance obligations for the bank - jurisdiction (where the client is located), role (the type of entity it is) and products (the products with which they trade). Fenergo’s Enterprise Compliance Platform’s sophisticated compliance rules engine will take this information and route the client’s application to the relevant regulatory-specific set of questions that must be answered to gain compliance with the identified regulations.