ISDA will subsequently work to have this initial iteration of the CDM demonstrated and validated on various new technologies during the second quarter of 2018. The Association will reach out to experts from the membership and beyond who have ideas for proof-of-concept projects where the ISDA CDM can be deployed, in order to further develop the model and maximize the potential for success.
The ISDA CDM is intended to provide a standard representation of events and actions that occur during the life of a derivatives trade, alongside the accompanying product data. Establishing a common set of data and processing standards that all participants can access and deploy will enhance consistency and interoperability across firms and platforms.
“The infrastructure that supports the derivatives market is complex, manually intensive and costly to maintain – it just isn’t scalable. New technologies such as distributed ledger and smart contracts offer the potential for greater automation and efficiency, reducing complexity and costs. But effective automation can only be built on standardization. That’s where the ISDA CDM comes in. We’re delighted to work with REGnosys to take this ambitious project to the next stage,” said Scott O’Malia, ISDA’s Chief Executive.
“We look forward to working with ISDA and its members to develop this digital marketplace repository of data and processes, leveraging our expertise in this space,” said Leo Labeis, Chief Executive of REGnosys.
“We will combine best-in-class technology with existing data standards to provide a new paradigm that market participants can use to deploy innovative solutions,” added Pierre Lamy, Chief Operating Officer at REGnosys.
REGnosys will work with ISDA to produce the framework for a digital representation of the ISDA CDM, and will create the first iteration of the digital model, focusing on the interest rates and credit asset classes. For the product representations, the project will analyze and build on the product data elements found in Financial products Markup Language.
When fully developed, the ISDA CDM will provide an industry standard blueprint for how derivatives are traded and managed across the lifecycle, and how each step in the process can be represented in an efficient, standardized fashion. Establishing a common set of data and processing standards that all participants can access will facilitate interoperability between firms and technology platforms. Eventual benefits of the ISDA CDM include:
Provides a common foundation for new technologies like distributed ledger, cloud and smart contracts to facilitate consistency and interoperability.
Reduces the current need for continual reconciliations to address mismatches caused by variations in how each firm records trade lifecycle events.
Enables consistency in regulatory compliance and reporting.
In parallel, ISDA is working with legal and academic experts to analyze the legal and governance issues relating to smart contracts and distributed ledger. That includes exploring how the ISDA definitions booklets can be enhanced to support further trade automation.
Further information is available in the following materials: