ISDA prepares for digital Common Domain Model testing, feedback

The International Swaps and Derivatives Association is preparing for testing of its digital Common Domain Model to begin in the next few weeks. Panelists at ISDA's Annual General Meeting in Miami on Thursday urged participants in the derivatives industry to work together to help the model achieve the goal of enhancing automation and efficiency.

Panelists representing the banking industry, central counterparties, fintechs and others discussed the potential they see in the digital CDM. From a fintech perspective, the digital CDM shows potential in the area of post-trade risk, said Gregory Schvey, CEO of Axoni. ISDA is providing the derivatives industry with “building blocks” and an “instruction manual,” and a successful model can lead to a “nirvana state” in terms of post-trade reconcilation, he said.

Todd McDonald, R3's co-founder and head of partnerships, encouraged the buy side, sell side and vendors to work together on the digital CDM effort. He also emphasized timeliness, as banks face a shorter time frame for communicating to the market and vendors about product delivery, and a lack of clarity about that time frame can lead to deployment in other areas where “quicker wins” might be achieved.

Tara McCloskey, vice president of operations at MetLife, said the buy side prefers one common set of standards and wants to influence fintech companies to adhere to the standard so that the technologies and tools under development can be easily adopted.

Valentino Wotton, managing director of Deriv/SERV strategy and product development at the Depository Trust & Clearing Corp., described the digital CDM as an “enabler” to maximize the potential of emerging technologies such as distributed ledgers. The DTCC is confident that its work in distributed-ledger technologies is aligned with the CDM, he said.

Dhiraj Bawadhankar, executive director of clearing solutions at CME Group, said the digital CDM shows a great deal of promise and that a strong model is needed to foster simplification in distributed ledgers.

Sunil Challa, director of business architecture at Barclays, said the next step is for utility providers, fintech companies and the broader industry to “kick the tires” on the upcoming prototype of the model and provide feedback to ISDA.