An ISDA whitepaper titled "The Future of Derivatives Processing and Market Infrastructure" outlined a set of principles to standardize derivatives market data, documentation and processing. The principles are a response to the complexity in the current derivatives ecosystem resulting from the need to meet a number of different and varying deadlines set by regulators across the globe.
The whitepaper includes the following arguments:
- Data: "a robust, granular, multi-use product identifier with strong governance based on an open-source infrastructure would remove many systemic inefficiencies and further promote transparency."
- Documentation: standardization and digitization of the "suite of existing ISDA documentation" would promote efficient processing.
- Processes: a review of business and collateral management processes "to aid compliance with new rules on margining for non-cleared derivatives" would reduce cost and inefficiency.
The authors of the whitepaper urge industry participants to "collaborate effectively across all sectors – market participants and their representatives, infrastructures and regulators" and "further explore the role of existing and new technology." They propose that ISDA:
- assess the current post-trade infrastructure and processes to expose inefficiencies and develop a mechanism to assist members in identifying, prioritizing and developing near-term solutions;
- coordinate the development of a plan for the creation of common domain models for the derivatives market by the end of 2016;
- work with industry stakeholders to identify a venue that can be tasked with creating an open-source repository (or repositories) for regulatory technology requirements; and
- collaborate with other trade associations to promote the whitepaper's initiatives and, in particular, explore opportunities to leverage advances in technology.
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