Earlier this week, the International Swaps and Derivatives Association (ISDA) published papers about the legal issues surrounding derivatives and distributed ledger technology (DLT).
For several years ISDA has been exploring how DLT could be used to reduce costs for market participants. This includes creating the Common Domain Model (CDM), a digital standard that covers events and processes involved in processing derivative transactions, although it’s not limited to blockchain.
But in addition to a technical roadmap, there’s a need to clarify potential legal uncertainties.
With the latest papers, the aim is to explore legal topics across several jurisdictions, six so far. For example, is DLT transaction documentation admissible in court? Would the court turn aside the contractually selected choice of governing law? And so on.
At the start of the year, papers for the first two jurisdictions, England and Wales, and Singapore were published. This was a collaboration between ISDA, R3, Clifford Chance and the Singapore Academy of Law. This week additional papers were published for France, Ireland, Japan and New York, produced by ISDA in association with R3 and local counsel.
There’s also a comparison of a series of questions across jurisdictions. Given several countries are exploring amending laws, such as Switzerland, this may not be a static target.