Claira aims to accelerate the financial markets revolution

Claira, the documentary intelligence fintech, has raised funds from Citi to accelerate the digitization of manual areas in financial markets and provide a roadmap for smart contracts and the tokenization of assets on blockchains.

The fintech has received a strategic investment from Citi Spread Products Investment Technologies (SPRINT), the strategic investment arm of the bank’s global spread products division.

Vitaliy Kozak, Global Co-Head of CLO, ABS and CDO Secondary Trading at Citi, said in a statement: “CLO (Collateralized Loan Obligation) professionals can spend more than 20 minutes analyzing a single structured credit document. Using Claira’s technology, the document analysis process is dramatically reduced, reducing the time it takes to extract relevant sections, perform initial analysis, and interpret results to provide actionable pricing insights to minutes.

Claira was launched in 2019 as a spin-off from the technology and venture capital arm of Exos Financial, a 100% cloud-native, data-driven institutional finance platform that was built to provide the full range of investment banking services in a modular and interconnected environment. way.

Joe Squeri, Exos Financial and Claira

Joe Squeri, co-founder and chief technology officer/COO at Exos and technical advisor at Claira, told Markets. Media: “I’ve been a CTO in the financial industry for several decades and I’ve really suffered from the pain point of trying to get information from documents.”

His previous roles include global CIO/CTO at Citadel, Goldman Sachs and Barclays Bank. Exos Financial is completely digital. So Squeri tried a dozen platforms that use natural language processing to try to digitize the company’s legal documentation.

“They were like Swiss Army knives,” Squeri added. “They were pretty good at a lot of things but not really good at one thing and I thought there had to be a better way to do it.”

He contacted Eric Chang and Alex Schumacher, co-founders of Claira, and fintech was born.

“Clairea allowed Exos to get into the industry because we don’t have to train the model for all of our documents,” Squeir said. “We have reduced our time and costs by more than 90% by not using external advice, which is a competitive advantage.”

Squeri pointed out that as institutional finance evolves, it is essential to digitize transactions such as exchanges or mergers and acquisitions.

“Documents are an essential lifeblood of institutional finance,” he added. “Having Claira provide document intelligence will enable institutional finance to truly revolutionize.”

In the future, when financial assets are placed on blockchains, they will need to be atomized so that terms and conditions can be lumped together and included in smart contracts.

“Claira could really be that acceleration by atomizing transactions into their components so that they can be chained,” Squeri said. “We can dare to dream.”

Proprietary technology

Chang told Markets Media that Claira has three key differentiators: its proprietary technology, user experience and transparency.

Most existing documentation platforms require users to label and tag data that is neither scalable nor durable. In contrast, Claira takes a computational linguistics approach that converts each sentence into a logic map and then maps all the relationships into a legal document.

Meet our team |  Claira Technology

Eric Chang, Claira

“We take advantage of the linguistic features of each of the document’s layouts and have built analyzes on top of that,” Chang added.

Users can fully configure and customize the data output which Chang says is essential for Claira to fit into existing investment processes or pricing and risk models. They also benefit from full transparency, as all data can be traced back to the exact layout of the original document.

Transforming markets

Citi will work with Claira to support its activity, starting with municipal prospectuses and CLOs.

Patrick Brett, head of municipal debt capital markets and capital solutions at Citi, said in a statement, “Claira’s AI-powered credit document analysis is well suited to the municipal bond market of $4 trillion including over 50,000 issuers and over one million unique securities. . Their use of specialized AI and pre-trained models far surpasses legacy natural language processing solutions, making Claira a game changer that is poised to transform our market. »

Claira provides data in a standardized format that can be analyzed for pricing, negotiation, risk, and operational processes to help negotiate complex deals faster, reduce business risk, and identify opportunities for market.

Chang pointed out that Claira can analyze years of transaction documentation and decipher market norms. He said: “The next evolution is to create benchmarks and use them, for example, as signals for pricing.”

Squeri added that markets have become more sophisticated, so traders need to know the terms, conditions and covenants of the underlying loans in CLOs.

“You can no longer rely on manual methods to extract this data because it doesn’t evolve,” Squeri said. “Exos Financial believes that as markets evolve, you must rely on data science and document intelligence for trading.”

Chang continued that the funding will be used to expand outside of the original CLO use case into other areas of financial markets that still have heavy manual processes, including private markets.

“We have other clients around commercial real estate, corporate lending and insurance,” Chang said. “We a number of buying clients who want to record all the details and obligations they have as a counterparty as they manage the risk and price of their portfolios. »

As Claira grows, Chang expects the company to form strategic partnerships with other major financial institutions within 12 months.

Squeri said, “From Exos Financial’s perspective, we see Claira making the institutional financial services industry much more efficient. Markets trade faster, with greater precision in pricing and risk management. »