Featured Product

    ISDA Opines on Standardization and Digitization in Derivatives Markets

    August 06, 2020

    ISDA explained its opinion on the standardization and digitization of financial/derivatives contracts and the associated documentation. A recent survey shows that members of ISDA from different business functions supported the ISDA objective of developing standards and digital formats for documentation and other products to support automation. ISDA is planning to make its forthcoming 2020 ISDA Interest Rate Derivatives Definitions available in a digital format—in line with the priority expressed by members in the survey. ISDA is also looking to align and integrate the digital documentation and legal data with other standards. ISDA, along with several other Associations, has written a letter to FSB, IOSCO, and BCBS to assert their joint commitment to defining and promoting the development of a digital future for financial markets, focused on three core areas: standardization, digitization, and distribution.

    The Associations include Association of German Banks, the Australian Financial Markets Association (AFMA), International Capital Market Association (ICMA), the International Islamic Financial Market, the International Securities Lending Association (ISLA), LBMA, and UK Finance. The letter highlights that the adoption of common data and process standards across the industry will allow for the consistent aggregation of global financial data and more comprehensive risk assessment of supervised firms, promoting greater confidence in the integrity of financial markets. ISDA is looking to align and integrate the digital documentation and legal data with other standards—for example, the Common Domain Model, which establishes a common digital representation of events and processes that occur during the lifecycle of a trade. Respondents to the survey noted that doing so will allow information within the documentation to flow directly through to trading, operational, and risk management systems in a consistent way, enabling front-to-back automation. 

    Increased digitization will improve risk management through greater alignment among contracts, processes, and data and will allow for the introduction of real-time regulatory oversight. None of this is possible without the industry-led development of enhanced standards and distribution of these standards in digital formats that allow direct deployment within these technologies. In the letter, the Associations highlight that they will support the members in developing these standards through a series of principles and objectives across standardization, digitization, and distribution, including the following:

    • Support the development of common, interoperable industry standard models for financial transactions and processes
    • Work with members and relevant authorities to promote alignment among disparate data standards and greater consistency of regulatory requirements across the market
    • Promote the adoption of standardized and simplified legal documentation where appropriate in the relevant market
    • Explore and pursue the delivery of industry-standard documentation in digital formats
    • Support the development of robust legal agreement data models aimed at connecting contractual terms with supporting processes and data
    • Work with members and relevant authorities to establish greater legal and regulatory certainty on the use of electronic contracts and signatures
    • Distribute new standards on an industry-wide, commercially reasonable basis where possible to support the development and implementation of interoperable and efficient technology solutions
    • Establish a robust and inclusive governance framework around the development, operation, and maintenance of any mutualized technology standards

     

    Related Links

    Keywords: International, Banking, Securities, Common Domain Model, Derivatives, Derivatives, Regtech, Automation, FSB, IOSCO, BCBS, ISDA

    Related Articles
    News

    APRA Publishes Results of Climate Risk Self-Assessment Survey

    The Australian Prudential Regulation Authority (APRA) has published the findings of its latest climate risk self-assessment survey conducted across the banking, insurance, and superannuation industries.

    August 04, 2022 WebPage Regulatory News
    News

    ACPR Publishes Updates Related to CRD IV and Covered Bonds

    The French Prudential Supervisory Authority (ACPR) published a notice related to the methods for calculating and publishing prudential ratios under the Capital Requirements Directive (CRD IV) and the minimum requirement for own funds and eligible liabilities (MREL).

    August 03, 2022 WebPage Regulatory News
    News

    BIS Paper Contributes to Debate on Regulating NBFIs and Big Techs

    The Financial Stability Institute (FSI) of the Bank for International Settlements recently published a paper proposing a framework for classifying financial stability regulation as either entity-based or activity-based.

    August 03, 2022 WebPage Regulatory News
    News

    EIOPA Publishes Guidance on Climate Change Scenarios in ORSA

    The European Insurance and Occupational Pension Authority (EIOPA) published the risk dashboard based on Solvency II data and the final version of the application guidance on climate change materiality assessments and climate change scenarios in the Own Risk and Solvency Assessment (ORSA).

    August 02, 2022 WebPage Regulatory News
    News

    EBA and ECB Respond to Proposals on Sustainability Disclosures

    The European Banking Authority (EBA) and the European Central Bank (ECB) published their responses to the consultations of the International Sustainability Standards Board (ISSB) and the European Financial Reporting Advisory Group (EFRAG) on sustainability-related disclosure standards.

    August 01, 2022 WebPage Regulatory News
    News

    BIS Report Notes Existing Gaps in Climate Risk Data at Central Banks

    A Consultative Group on Risk Management (CGRM) at the Bank for International Settlements (BIS) published a report that examines incorporation of climate risks into the international reserve management framework.

    July 29, 2022 WebPage Regulatory News
    News

    EBA Publishes Multiple Regulatory Updates for Regulated Entities

    The European Banking Authority (EBA) published the final guidelines on liquidity requirements exemption for investment firms, updated version of its 5.2 filing rules document for supervisory reporting, and Single Rulebook Question and Answer (Q&A) updates in July 2022.

    July 29, 2022 WebPage Regulatory News
    News

    EIOPA Issues SII Taxonomy and Guide on Sustainability Preferences

    The European Insurance and Occupational Pensions Authority (EIOPA) published Version 2.8.0 of the Solvency II data point model (DPM) and XBRL taxonomy.

    July 29, 2022 WebPage Regulatory News
    News

    EESC Opines on Proposals on CRR and European Single Access Point

    The European Union published, in the Official Journal of the European Union, an opinion from the European Economic and Social Committee (EESC); the opinion is on the proposal for a regulation to amend the Capital Requirements Regulation (CRR).

    July 29, 2022 WebPage Regulatory News
    News

    HM Treasury Publishes Multiple Regulatory Updates in July 2022

    HM Treasury published a draft statutory instrument titled “The Financial Services (Miscellaneous Amendments) (EU Exit) Regulations 2022,” along with the related explanatory memorandum and impact assessment.

    July 29, 2022 WebPage Regulatory News
    RESULTS 1 - 10 OF 8424