ISDA launches CDM pilot on DAML
08 October 2020 New York
Image: Wayhome Studios / Adobestock.com
The International Swaps Derivatives Association (ISDA) is running a pilot of its Common Domain Model (CDM) for the clearing of interest rate derivatives using distributed ledger technology.
The CDM pilot leverages DAML, an open source smart contract language created by Digital Asset.
By placing the CDM on a distributed ledger, ISDA aims to remove the burden of setting up connections to inappropriate systems and services, facilitating interoperability, automation and straight-through processing.
“Use of the CDM for clearing using DAML will increase standardisation and operational efficiency across the entire clearing lifecycle,” says Ian Sloyan, director in market infrastructure and technology at ISDA.
ISDA explains that this pilot takes the CDM model currently used for clearing and adds new features for the signing of state transitions, data ownership and privacy elements, which are necessary to put the CDM clearing model into production.
The resulting new models will initially exist as complementary artefacts on the CDM
portal and may eventually be integrated into the core CDM with those new features included, ISDA says.
The association has been working with Digital Asset since 2018 to jointly develop an open-source reference code library in DAML, which was developed in response to regulatory changes, high costs associated with current manual processes and a demand for greater automation across the industry.
According to Digital Asset, the CDM establishes a common blueprint for events that occur throughout the derivatives lifecycle, paving the way for greater automation.
The Australian stock exchange (ASX) and Swiss investment bank UBS are providing input to validate additional functionality of the CDM alongside ISDA and Digital Asset.
Allan McGregor, senior manager, rates at ASX, says: “ASX supports ISDA’s ongoing efforts to lead the industry-wide adoption of the CDM, which can achieve significant operational efficiencies for the industry.
“ASX has been working with ISDA and Digital Asset to explore a number of derivatives central clearing use cases and good progress has been made illustrating how complex, multi-party workflows could be standardised and automated leveraging the CDM in DAML, with the potential to achieve benefits and cost savings for users.”
The CDM pilot leverages DAML, an open source smart contract language created by Digital Asset.
By placing the CDM on a distributed ledger, ISDA aims to remove the burden of setting up connections to inappropriate systems and services, facilitating interoperability, automation and straight-through processing.
“Use of the CDM for clearing using DAML will increase standardisation and operational efficiency across the entire clearing lifecycle,” says Ian Sloyan, director in market infrastructure and technology at ISDA.
ISDA explains that this pilot takes the CDM model currently used for clearing and adds new features for the signing of state transitions, data ownership and privacy elements, which are necessary to put the CDM clearing model into production.
The resulting new models will initially exist as complementary artefacts on the CDM
portal and may eventually be integrated into the core CDM with those new features included, ISDA says.
The association has been working with Digital Asset since 2018 to jointly develop an open-source reference code library in DAML, which was developed in response to regulatory changes, high costs associated with current manual processes and a demand for greater automation across the industry.
According to Digital Asset, the CDM establishes a common blueprint for events that occur throughout the derivatives lifecycle, paving the way for greater automation.
The Australian stock exchange (ASX) and Swiss investment bank UBS are providing input to validate additional functionality of the CDM alongside ISDA and Digital Asset.
Allan McGregor, senior manager, rates at ASX, says: “ASX supports ISDA’s ongoing efforts to lead the industry-wide adoption of the CDM, which can achieve significant operational efficiencies for the industry.
“ASX has been working with ISDA and Digital Asset to explore a number of derivatives central clearing use cases and good progress has been made illustrating how complex, multi-party workflows could be standardised and automated leveraging the CDM in DAML, with the potential to achieve benefits and cost savings for users.”
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