ISLA adds sec lending code to model which digitally represents the trade lifecycle

Contribution to the code will the addition of securities loan product and transaction definitions, as well as a settlement and allocation event for a cash settled DVP loan.

By Jonathan Watkins

The International Securities Lending Association (ISLA) has contributed code to the open source core domain model (CDM), which its chief executive says will set the backdrop for the future state of the markets.

The announcement follows through on an agreement signed between ISLA and the International Swaps and Derivatives Association in July 2020.

A CDM encodes a transaction and the subsequent events that can occur explicitly and unambiguously, so that common inputs lead to common outputs throughout the lifecycle of a transaction. The initiative is aimed at enhancing consistency and facilitating interoperability across firms and platforms.

The CDM would encode the entirety of the life of a transaction from onboarding, contract negotiation, execution, processing and ultimately termination.

ISLA’s contribution was produced during the Securities Lending CDM Pilot, completed in 2020 in conjunction with REGnosys.

The code comprises the securities loan product and transaction definitions, as well as a settlement and allocation event for a cash settled DVP loan.

“I am absolutely delighted that we are now able to begin the process of sharing the power of the CDM with our wider community,” said Andrew Dyson, CEO, ISLA.

“The addition of our pilot work from last year within the core CDM is a clear statement of intent from ISLA and our friends at ISDA. As we progressively develop the combined open source cross product CDM, market participants will start to see the benefits of this important investment that will set the backdrop for the future state of our markets.”

The milestone marks the first time components of a non-derivative product have been contributed to the CDM. ISLA added in a statement that it represents the development of a truly cross-product model for the benefit of the financial services industry.

“Having securities lending products and events added to the CDM is an important step in our shared ambition to create a single set of machine-readable standards that can be used across asset classes,” said Scott O’Malia, chief executive, ISDA. This will ultimately increase efficiencies for market participants, reduce costs and enable greater levels of automation. We look forward to working with ISLA and others to further develop the CDM.”

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