The dust has settled on another CDM Showcase, held in collaboration with ISDA, ICMA and FINOS. Over the few weeks, I’ve had the time to digest and reflect on the day. Here are some of my main takeaways after having the privilege of representing ISLA in the role of compere for the day.
The Time is Now
A striking statement indeed. But why now? In a period of all-encompassing change, have we ever taken the time to question why – why has there been such a push for digital standardisation within a model such as the CDM? Well firstly, the engagement with this concept across our sector speaks for itself. Within the space of two years the CDM Showcase has expanded to become a flagship event, with nearly 200 market participants registering for this year’s event.
Industry-wide demand aside, the versatility of the Common Domain Model has been its true shining light. In response to regulatory, capital, and technological pressures, the drive for industry alignment has been prevalent for quite some time, however, the method of achieving this goal has remained unclear. This is where the CDM enters the conversation. With a plethora of use-cases ranging from the digitalisation of legal documents to interoperability, digital regulatory reporting and best practices, the model can be utilised to resolve specific pain points through the trade lifecycle. The ability for the model to serve industry participants across the value chain resonated throughout the CDM showcase.
The Great Re-papering is Coming
Fintech, blockchain, open-source, automation, trade execution, digital regulatory reporting, and collateral management – all concepts that one could reasonably associate with the CDM. While a legal agreement is an equally important dimension to the model, it may not come to mind quite as quickly.
Following in the innovative spirit of the CDM however, ISLA saw this as an opportunity to create the Digital Assets – Legal Working Group, under our Legal Steering Group. In collaboration with ICMA, this group has become an ever-growing forum for our member firms’ legal representatives to review developments such as the Digital Assets annex to the GMSLA, ISLA’s legal documentation suite. As the legal industry is undergoing a transformative shift from hard copy to digital documentation, CDM-formatted digital representations can allow the legal terms that govern a trade to be attached to it and facilitate the automation of lifecycle events. I fully expect to see further application of the CDM in this space.
Uncover Your Catalyst for Change, No Matter How Big or Small
I believe ISLA’s own Chris Rayner put it well, when explaining that “this is the beauty of the CDM, you can start with a small use case and build upon it!” The key principle is uncovering “your” catalyst for change and find which parts of the CDM can be tailored to resolve your specific pain points. This is not a one size fits all approach. While the model’s versality has already been praised, I would like to also add how effectively the CDM can be split into segments which can be utilised and updated independently to then be re-implemented into the model.
This aspect of the model has shown to be particularly useful when tracking developments across the global regulatory landscape. With new rules for EU EMIR, JFSA, UK EMIR, ASIC and MAS all coming into force before the end of 2024, Digital Regulatory Reporting has been expanded to accommodate transactions through to full regulatory reporting and submission into ISO20022 format within the CDM.
Another example was brought to light during a fascinating panel discussion between members of ISLA’s CDM Trading Working Group. Trading Apps announced the launch of their ground-breaking TA.Link platform on stage at the Showcase. The platform intends to facilitate implementing the lender availability structure in the CDM, allowing borrowers and lenders to communicate their offers and requests bilaterally. This proves that incremental gains can already be realised without the need to roll out the CDM to solve every process and system.
The Need for Training and Documentation is Clear
There were numerous asks from the room during the course of the Showcase. Most of which linked back to the need for greater understanding of the ‘how’ rather than the ‘what’. How to get started with the CDM? How to demonstrate the value of the CDM to the product owners to see real adoption from the business-side?
While there has already been great strides made on this front, the need for training and documentation is still paramount. It was great to see ISDA, in collaboration with REGnosys, outlining their work developing online training and documentation to provide developers through to product owners all the baseline information they need to get started with the CDM. ISLA is a huge advocate for education when it comes to the CDM, having published several pieces of educational documentation covering business use-cases from trade execution to document digitalisation which can be accessed on the ISLA CDM landing page. I expect more documentation to be published over the coming months to further break down the boundaries to entry for the CDM.
To close, the CDM continues to position itself as a viable, scalable and adaptable model to address a broad range of pain points from end to end. The opportunity and need is to now engage with product owners to bring the CDM to life through more use cases and clearer paths to implementation.
Adrian Dale
