Private International Law Aspects of Derivatives Contracts Involving DLT

These four papers consider the private international law, or conflict-of-law, aspects of derivatives contracts involving distributed ledger technology (DLT), commonly known as blockchain technology.

The development and implementation of new technologies such as DLT within the derivatives industry have the potential to create a more robust financial markets infrastructure, achieve operational efficiencies through increased automation and reduce costs for market participants.

As these technologies mature, it is important to understand the evolving legal treatment of derivatives traded on DLT platforms. Given the novel complications over where data, assets and even counterparties are located in a DLT environment, it is useful to examine key questions on how to determine which law applies and how to evaluate conflicts of governing law. While some jurisdictions have produced analysis on areas of perceived legal uncertainty, these issues remain untested in many of the jurisdictions and cross-border environments important to the derivatives industry.

In January 2020, ISDA, R3, Clifford Chance and the Singapore Academy of Law jointly published Private International Law Aspects of Smart Derivatives Contracts Utilizing Distributed Ledger Technology. That paper considered the private international law, or conflict-of-law, aspects of derivatives contracts governed by the laws of England and Wales or Singapore involving DLT.

As a result, ISDA (in association with R3 and local counsel) has published additional papers that consider these issues from French, Irish, Japanese and New York law perspectives.

Read the papers and a jurisdiction comparison table by clicking on the PDFs below.

Response to FCA on CFI Codes for Transparency

On March 19, ISDA responded to Chapter 3 of the UK Financial Conduct Authority’s (FCA) Quarterly Consultation CP26/8 on transparency requirements for financial instruments under Market Conduct Sourcebook (MAR) 11. Sections 3.11-3.13 of the consultation paper explain a discrepancy between...

Why We Need Safe and Efficient SFT Markets

Securities financing transactions (SFTs) play a vital role in fostering liquidity, mobilizing collateral and supporting the smooth functioning of derivatives markets. But during periods of stress, secured funding markets often come under pressure just when they’re needed most, with reduced...

Response to BoE on Clearing Exemption for PTRR

On March 11, ISDA submitted a response to the Bank of England’s consultation on a proposed approach to exempting post-trade risk reduction (PTRR) transactions from the derivatives clearing obligation under Article 4 of the European Market Infrastructure Regulation (EMIR). ISDA...

IQ Interview with David Bailey

The Bank of England’s Prudential Regulation Authority recently finalized its Basel 3.1 framework for implementation at the start of 2027. David Bailey, executive director for prudential policy, talks to IQ about the importance of global consistency and the need to...