Digital Asset and ISDA to Use Smart Contract Tool to Standardize Derivatives Trading

By Anne W. | April 13, 2019
Digital Asset and ISDA to Use Smart Contract Tool to Standardize Derivatives Trading

Digital Asset, a distributed ledger technology (DLT) company that builds infrastructure for regulated financial institutions, has joined hands with the International Swaps and Derivatives Association (ISDA) in New York to boost the use of smart contracts in derivatives trades.

The aim of their collaboration is to leverage Digital Asset’s in-house smart contracts modelling to enhance the standardization of trade solutions in ISDA’s Common Domain Model (CDM) – and by so doing aim to help spread CDM’s adoption amongst market participants. ISDA claims CDM is the first industry solution to tackle the lack of standard conventions in how derivatives trade events and processes are represented. It establishes a common blueprint for events that occur throughout the derivatives lifecycle, paving the way for greater automation.

According to ISDA’s press release (Apr 9), their work will specifically see the development of an open-source reference code library. This new tool will help developers implement CDM for trading and managing derivatives via Digital Asset’s smart contract language, DAML.

DAML was open-sourced on April 4, allowing software developers to analyze different workflows, and to automate trading between actors. Focusing on interoperable technical solutions that enhance standardization, the library will allow CDM to fully integrate with DAML. Consistent with ISDA’s aim to encourage the widest possible take-up of CDM, the specification will be compiled to executable libraries in other languages.

“Following our success at the Barclays DerivHack in London last year, we have been working closely with ISDA with the joint goal of standardizing processes across the derivatives industry,” Kelly Mathieson, Head of Enterprise Solutions at Digital Asset, said in the press release.

“We are very excited to now make this reference implementation available to users, enabling financial institutions to be in control of their own data,” she added.

Back in 2018, ISDA proposed the first digital version of CDM to enhance consistency and create greater capability in the derivatives market.

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