Digital Asset, an enterprise blockchain company, is working with the International Swaps and Derivatives Association (ISDA) in order to develop a software that is meant to simplify the adoption of the trade group’s potentially cost-slashing data standards.
Announced Tuesday night in New York, the reference code library is aimed at helping developers implement ISDA’s Common Domain Model (CDM) in solutions for trading and managing derivatives. The codes are written in DAML, the smart contract language created and recently open-sourced – by Digital Asset.
Kelly Mathieson, head of enterprise solutions at Digital Asset, said in a press release:
“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. We are very excited to now make this reference implementation available to users … enabling financial institutions to be in control of their own data.”
An ambitious initiative by ISDA, the CDM was first proposed in 2017 so as to standardize the ways derivative trade events and processes are represented. This way IT systems of various entities can talk to each other, improve efficiency and trim costs. As per Barclays, a U.K.-based megabank, estimate the CDM could save the financial sector $3 billion a year.
Though CDM is not a blockchain-specific project, data standardization at such a level is something of a prerequisite for distributed ledger technology (DLT) to reap much of a benefit for the financial industry. Barclays being the DLT trailblazer, championed the effort and set up an internal CDM adoption working group about a year ago.
In June, ISDA published an initial digital representation of the CDM, so that the association’s members can access and test it.
The Reference Code
The Digital Asset’s reference code library will ease and standardize the generation of derivative “life cycle” events i.e. everything that happens over the course of a trade, starting from agreeing on terms to amending the contract to termination
Digital Asset explained in a press release:
“This may otherwise involve a number of complex steps. For example, generating payments involves rolling out a calculation schedule and applying date adjustments, before calculating day-count fractions and interest amounts as defined in the ISDA CDM.”
The company added, the reference code library will be available under an open-source license and the specification will be compiled, or translated, “to executable libraries in other languages.” Now available in DAML, the ISDA CDM on the ISDA’s Rosetta portal, along with Java and JSON.