ISDA published the third in a series of legal guidelines for smart derivatives contracts. This guideline is intended to explain the core principles of ISDA collateral documentation and raise awareness—among technology developers, collateral operations, risk managers, and other key stakeholders—about important legal and regulatory issues that must be considered when a technology solution is applied to the collateral management process.
This paper provides guidelines to help the development and application of technology in the automation of collateral management. The paper is not intended to specify or recommend any particular approach or to address any particular technological application or project. The guidelines in this paper suggest steps that should be taken to ensure that the design and implementation of new technology solutions are consistent with the existing legal and regulatory standards. The paper also highlights areas for which further industry collaboration will be required to identify and resolve the existing areas of legal and regulatory uncertainty. Specifically, the paper describes:
- Current challenges that exist in the collateral management process and how they can be resolved through greater automation
- The importance of increased standardization in creating the foundation for automated technology solutions
- The ISDA strategy for developing and delivering greater standardization and digitization of ISDA collateral documentation
- Existing legal standards as set out in the ISDA collateral documentation and the key points for technology developers to consider as they develop and implement new technology solutions within this legal and regulatory framework
- Press Release
- Guidelines: Collateral (PDF)
- Guidelines: ISDA Master Agreement (PDF)
- Guidelines: Introduction
Keywords: International, Banking, Securities, Smart Contracts, Derivatives Contracts, Regtech, Guideline, Distributed Ledger Technology, Artificial Intelligence, Automation, Fintech, ISDA
Previous ArticleOSFI Proposes Changes to Instruction Guide for Pension Plans
The European Commission (EC) published a public consultation on the review of revised payment services directive (PSD2) and open finance.
The European Commission (EC) has issued two letters mandating the European Supervisory Authorities (ESAs) to jointly propose amendments to the regulatory technical standards under Sustainable Finance Disclosure Regulation or SFDR.
The European Banking Authority (EBA) published its annual report on convergence of supervisory practices for 2021. Additionally, following a request from the European Commission (EC),
The Farm Credit Administration published, in the Federal Register, the final rule on implementation of the Current Expected Credit Losses (CECL) methodology for allowances
The U.S. Securities and Exchange Commission (SEC) looks set to intensify focus on crypto-assets and cyber risk and extended the comment period on the proposed rules to enhance and standardize climate-related disclosures for investors.
The Australian Prudential Regulation Authority (APRA) announced reduction in the aggregate Committed Liquidity Facility and issued an update on the operational preparedness for zero and negative market interest rates.
The Commission for the Financial Market (CMF) in Chile published capital adequacy ratios (as of February 2022, January 2022, and December 2021) for 17 banks and for the banking system.
The Prudential Regulation Authority (PRA) issued a statement on the European Banking Authority (EBA) guidelines on management of non-performing exposures (NPEs) and forborne exposures.
The European Banking Authority (EBA) updated the implementing technical standards that specify the data collection for the 2023 supervisory benchmarking exercise in relation to the internal approaches used in market risk, credit risk, and IFRS 9 accounting.
The European Insurance and Occupational Pensions Authority (EIOPA) published a feedback statement on the responses received to the consultation on blockchain and smart contracts in insurance.