Today the International Swaps and Derivatives Association (ISDA) unveiled a pilot implementation of Common Domain Model (CDM), a digital standard that covers events and processes involved in processing derivative transactions. The CDM was introduced in 2018, but today’s iteration is focused on the clearing lifecycle.
Blockchain firm Digital Asset previously worked with ISDA to open source a version of CDM implemented in its DAML smart contract language. And the current pilot is also with Digital Asset, with input from UBS and Digital Asset client, the Australian Securities Exchange (ASX).
The CDM’s importance is reflected in the sheer size of the derivatives space compared to the stock and bond markets. Global stock markets are worth around $90 trillion. The open interest in exchange-traded derivatives for interest rate and foreign exchange is $85 trillion. Over the counter (OTC), foreign exchange derivatives amount to $92 trillion.
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