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.

Remove Bureaucracy from Cross-margin Approvals

Cross-margining programs play a critical role in financial markets. By ensuring margin requirements more closely reflect the actual risk of a portfolio of products, they reduce liquidity strain and improve market efficiency, both of which will become even more important...

Joint Response on CCP Resolution

On September 7, ISDA and FIA responded to a Bank of England (BOE) discussion paper on central counterparty (CCP) resolution. The associations support greater clarity on valuation capabilities prior to a crisis scenario and the boundary between recovery and resolution,...