Jean-Marc Eber, CEO of LexiFi was invited as a speaker at ZHAW’s 4th conference on AI in finance!
The conference has brought together professionals and academics from both the financial and technological industries to discuss AI and Big data challenges in Finance. Jean-Marc spoke about the illusion of derivatives contracts standardization and discussed the relevance of a formal description of complex financial contracts.
Contract-based Automation for Derivatives, by Dr. Jean-Marc Eber, LexiFi:
Standardizing derivative contracts is an illusion, as one of finance industry main goals is to adapt to ever changing market situations or perceptions. Financial institutions, market participants, technology providers, policy makers and regulators should instead concentrate on standardizing the method for describing ever new financial contracts. Designing such a generic description framework is a surprisingly challenging task, if one is looking for a workable solution that can be applied from the simplest to the most intricate financial contracts.
We argue that a formal description of complex financial contracts is both desirable and practical, as illustrated by an existing and field-proven implementation. Moreover, we show that such a standardized specification of financial contracts enables a business to unleash the full spectrum of innovation, while controlling costs and operational risks.
We discuss the main requirements of any formal language used to describe the behavior of financial contracts and their life-cycle, and show how long-standing problems in the industry can be efficiently solved by using such a formalism.