ISDA and Digital Asset Launch CDM Clearing Pilot Using DAML

ISDA expands the capabilities of its Common Domain Model (CDM) for the clearing of over-the-counter derivatives using DAML

October 6, 2020

Clearing is an essential part of the derivatives landscape and it is extremely important the operational processes are consistent to ensure seamless automation. As a result, ISDA and Digital Asset announced today a pilot implementation of the Common Domain Model (CDM) for the clearing of interest rate derivatives using DAML. 

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. Those elements are inherent within DAML as features with native support. 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.

ASX and 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.

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"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.

"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.

ISDA has been working with Digital Asset since early 2018, when the two firms jointly developed an open-source reference code library in DAML to help with the adoption of the CDM. The event specification module was built to simplify and standardize the process of generating lifecycle events defined in the CDM. The concepts found in the event specification module have since been built into the core CDM as native functions.

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