In "Legal Guidelines for Smart Derivatives Contracts: Equities" - ISDA argued that lack of automation presents challenges to streamlining operational processes within the equity derivatives market. The new guidelines are intended to "provide an introduction to equity derivatives for readers who are designing and implementing technology solutions for these products."
ISDA asserted that automation helps to:
- reduce complexity and offer "greater opportunities" for fundamental business transformation;
- improve cost-efficiency by reducing employees' time devoted to collecting and processing data;
- increase revenue growth; and
- mitigate operational risk by reducing errors in the way transactions are processed.
ISDA recommended:
- automating trade types and specific features that are agreeable for both dealers and end users;
- assessing whether the market practice is clear enough to designate certain trade lifecycles for automation efforts; and
- determining the necessary off-ramp manual processes to maintain the market's current response to extraordinary event risk.
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