ISLA integrates clause library and taxonomy with CDM

The International Securities Lending Association (ISLA) announced the integration of the ISLA Clause Library & Taxonomy, which is expect to facilitate better management of decades’ worth of executed contracts, and for future contracts that industry participants may look to execute.

It provides an industry data dictionary for representing GMSLA contracts within a legal agreement data model, while also paving the way for the use of data extraction tools with artificial intelligence (AI) and natural language processing (NLP) capabilities, allowing institutions to optimize resources such as capital, liquidity, and collateral – as well as simplify regulatory reporting and day-to-day operations.

Software vendors and platforms can more easily provide solutions to the industry by adopting the CDM legal agreement standard, and therefore be able to work to a standard data form, which has the potential to dramatically improve legal agreement data quality, and consequently the outputs of their systems for clients.

The work is a culmination of a series of industry working groups and efforts by ISLA, its members and support from implementation partner D2LT. It represents the first complete contribution to the CDM in respect of a master agreement, and therefore an important milestone in the development of the model as a global financial market standard.

Andrew Dyson, ISLA’s CEO, said in a statement: “The pursuit of digitalization in all its forms, including the wider adoption of DLT and tokenization, can only realistically realize its full potential if products are built on solid and sustainable foundations. Bringing key elements of the Clause Library into the CDM is part of the process that will allow market participants to increasingly develop solutions and novel products that are underpinned by these standards, thereby driving better interoperability and efficiencies across our markets.”

Chris Rayner, senior associate for Market Infrastructure & Technology at ISLA, said in a statement: “Being able to represent a trade along with the legal terms that govern it will facilitate enhanced validation of lifecycle events and open the door for automation of these events using smart contracts, a piece of code, or a program, that automatically executes pre-defined actions upon certain conditions being met.”

Akber Datoo, CEO of D2 Legal Technology, an implementation partner, said in a statement: “It is very exciting to see this next step in the GMSLA’s digitalization journey. It will address the issues of legal agreement data quality and governance, and will no doubt over the upcoming months ensure resource optimization, regulatory compliance and operational management for the industry. The fact that vendor platforms have already begun to adopt this CDM contribution is fantastic and testament to the excellent work that has been completed.”


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