The International Swaps and Derivatives Association announced a pilot implementation of the Common Domain Model (CDM) for the clearing of interest rate derivatives using DAML, open source smart contract language. The pilot takes the CDM model 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. The Australian Securities Exchange (ASX) and Swiss bank UBS have been providing input to validate additional functionality of the CDM alongside ISDA and Digital Asset.
“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 standardized and automated leveraging the CDM in DAML, with the potential to achieve benefits and cost savings for users” said Allan McGregor, senior manager, Rates at ASX, in a statement.
“I am confident that the initiative will provide clarity on to what extent the CDM in DAML can be leveraged for cleared derivatives,” said Vinay Srinivas, Managing Director, APAC head of Quant Analytics and Digital Transformation, Global Markets, at UBS, in a statement.
“Use of the CDM for clearing using DAML will increase standardization and operational efficiency across the entire clearing lifecycle,” said Ian Sloyan, director in Market Infrastructure and Technology at ISDA, in a statement.