The Common Domain Model: A Kickoff for Digitization in Collateral at Last?

Finadium
May 2019

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ISDA’s Common Domain Model (CDM) is generating interest in the collateralized trading space, including OTC derivatives and securities finance, as a methodology for standardizing data taxonomies across firms. The model has applications for data transfers on existing platforms as well as effectively introducing distributed ledger technology into capital markets activities. If successfully adopted, CDM could potentially enable a new generation of growth in collateralized trading technology and product development.

In this report, we analyze CDM traction on both the vendor and user sides to help determine the potential scope of impact that CDM could have in digitization. Multiple vendors have expressed interest in building tools for clients using CDM while responses from the industry have been more considered, but all agree that a standardization of data elements for bilateral communications is helpful. The greater question is whether CDM could initiate broad-based changes in industry practices in digitization that would reduce costs. The challenge of any new technology is whether it solves core business problems. This report aims to answer that question for CDM.

This report is useful reading for product managers, technologists and operations professionals in collateral trading, including OTC derivatives, securities lending and repo.

Table of Contents

  • Executive Summary
  • Introducing the Common Domain Model
  • Vendor Adoption
  • Industry Responses
    • – CDM and Securities Finance
  • The Value and Pace of Digitization
    • – What’s the Real Value Add to Market Participants?
  • About the Author
  • About Finadium LLC
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