For Immediate Release Tuesday, November 16, 2004
For More Information Contact: Louise Marshall, (212) 901-6000; lmarshall@isda.org
NEW
YORK, Tuesday, NOVEMBER 16, 2004 – The
International Swaps and Derivatives Association, Inc. (ISDA) today published a set
of Guidelines for matching, netting and settling cash flows in respect of
privately negotiated derivatives transactions. The document, ‘Cash Flow Matching, Netting and Settlement: High Level
Requirements and Guidelines for Strategic Processing Standards,’ seeks to
standardize operational practice and to support market development through
technological innovation. The Guidelines were produced by the Process Working
Group of ISDA’s Operations Committee and will help deliver the goals established in ISDA’s Strategic Plan for transforming operational processing, as set forth in
December 2003. Both documents are available at www.isda.org.
The Guidelines promote pre-settlement matching of
gross cash flows from privately negotiated derivatives transactions as the
basis for enabling parties to net payments and thereby reduce the number of
physical cash flows between them. The Guidelines also address the potential for
establishing a multilateral, centralized cash flow settlement service for
privately negotiated derivatives trades. Within the document, ISDA encourages
the use of Financial products Mark-up Language (FpML) as a means to facilitate
implementation of these recommendations. ISDA intends the reach of
this document to be as inclusive as possible in terms of the number and nature
of participants in the process as well as the range of instruments covered.
“Agreement on a market standard for pre-settlement
matching of cash flows is a critical first step to achieving greater efficiency
in cash flow processing,” said Robert
Pickel, Chief Executive Officer and Executive Director of ISDA. “ISDA
is confident, as its members move toward agreeing standards in this area, that
the deployment of technological solutions will aid the desired processing
efficiencies and thereby significantly reduce the potential for certain
operational risks. ISDA will work with the full range of industry participants,
including vendors, to bring these solutions into being."
FpML is the business information exchange standard for electronic dealing and processing of financial derivatives instruments. It establishes the industry protocol for sharing information on, and dealing in, financial swaps, derivatives and structured products over the Internet. It is based on XML (Extensible Markup Language), the standard meta-language for describing data shared between applications. FpML will eventually cover all categories of privately negotiated derivatives. Information about the FpML standard, the specifications and the different working groups can be found on the FpML web site: www.fpml.org.
ISDA
is the global trade association representing leading participants in the
privately negotiated derivatives industry. ISDA was chartered in 1985, and
today has more than 600 member institutions from 46 countries on six
continents. These members include most of the world's major institutions that
deal in privately negotiated derivatives, as well as many of the businesses,
governmental entities and other end users that rely on over-the-counter
derivatives to manage efficiently the financial market risks inherent in their
core economic activities. Information about ISDA and its activities is
available on the Association's web site: www.isda.org.
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