ISDA plans to extend digitisation
09 January 2019 London
Image: Shutterstock
The International Swaps and Derivatives Association (ISDA) has started work on standardising further documentation to enable digitisation and electronic processing, starting with the schedule to the ISDA Master Agreement, according to the association’s quarterly report.
The expansion around digitisation comes after the association teamed up with Linklaters to launch ISDA Create - IM last year. ISDA Create enables users to produce, deliver, negotiate and execute initial margin (IM) documents with multiple counterparties simultaneously.
The report explained that other ISDA documentation will be added to ISDA Create over time, creating an electronic negotiation platform and related documentation, for example, custodial.
Katherine Tew Darras, ISDA’s general counsel, explained: “Negotiating IM documentation typically takes significant time and resource, and has to be repeated over and over again with each counterparty. ISDA Create - IM will drastically improve the efficiency of this process, enabling parties to deliver a document to multiple parties at the same time, and then to negotiate changes on a bilateral basis using the platform.”
Doug Donahue, partner at Linklaters, added: “The development and launch of ISDA Create - IM is a critical step for our industry as we all look to leverage efficiencies enabled by technology. As an ISDA platform, ISDA Create - IM has benefitted from an unprecedented amount of industry input from the most active sell-side and buy-side participants in the market.”
“As a result, we are confident that the ISDA Create foundation being built for ISDA Create - IM can be used for myriad future documentation-focused technology initiatives led by ISDA.”
The aim of ISDA’s digitisation expansion is to create a more standardised language and a common menu of choices that parties can elect to use.
It suggested that the platform will mean shorter negotiations around documentation and will contribute to the creation of a standard, industry-wide legal agreement data model.
According to the ISDA report, this standardisation “is an important precursor to the development of smart contracts, which could drive further efficiencies and dramatically reduce the need for manual intervention”.
It explained that the association is working on a variety of initiatives to identify documents and provisions that are suitable for standardisation, as well as highlighting legal issues that need to be considered when developing smart contracts.
Together, these workstreams will help shift contract negotiation, execution and ongoing performance from a largely paper-based, manually intensive process to a more automated one, creating a more efficient derivatives market.
The expansion around digitisation comes after the association teamed up with Linklaters to launch ISDA Create - IM last year. ISDA Create enables users to produce, deliver, negotiate and execute initial margin (IM) documents with multiple counterparties simultaneously.
The report explained that other ISDA documentation will be added to ISDA Create over time, creating an electronic negotiation platform and related documentation, for example, custodial.
Katherine Tew Darras, ISDA’s general counsel, explained: “Negotiating IM documentation typically takes significant time and resource, and has to be repeated over and over again with each counterparty. ISDA Create - IM will drastically improve the efficiency of this process, enabling parties to deliver a document to multiple parties at the same time, and then to negotiate changes on a bilateral basis using the platform.”
Doug Donahue, partner at Linklaters, added: “The development and launch of ISDA Create - IM is a critical step for our industry as we all look to leverage efficiencies enabled by technology. As an ISDA platform, ISDA Create - IM has benefitted from an unprecedented amount of industry input from the most active sell-side and buy-side participants in the market.”
“As a result, we are confident that the ISDA Create foundation being built for ISDA Create - IM can be used for myriad future documentation-focused technology initiatives led by ISDA.”
The aim of ISDA’s digitisation expansion is to create a more standardised language and a common menu of choices that parties can elect to use.
It suggested that the platform will mean shorter negotiations around documentation and will contribute to the creation of a standard, industry-wide legal agreement data model.
According to the ISDA report, this standardisation “is an important precursor to the development of smart contracts, which could drive further efficiencies and dramatically reduce the need for manual intervention”.
It explained that the association is working on a variety of initiatives to identify documents and provisions that are suitable for standardisation, as well as highlighting legal issues that need to be considered when developing smart contracts.
Together, these workstreams will help shift contract negotiation, execution and ongoing performance from a largely paper-based, manually intensive process to a more automated one, creating a more efficient derivatives market.
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