In a white paper released last week, the International Swaps and Derivatives Association, Inc. (ISDA) proposed new solutions for the automation and streamlining of derivatives trade processes.
The paper, titled The Future of Derivatives Processing and Market Infrastructure, identifies a number of challenges present in the existing process structure, and contains recommendations that have the potential to improve efficiency, reduce complexity, and lower costs for market participants
“The derivatives industry has become reliant on legacy infrastructures and processes that have been layered on top of each other over time,” Scott O’Malia, ISDA’s chief executive said. “That might be the result of historical acquisitions, where the respective systems haven’t been fully integrated. More recently, the sheer pace of regulatory change has meant firms have been under pressure to tackle the next pressing deadline. The result is a derivatives infrastructure that is duplicative and based on incompatible operating standards, and this isn’t sustainable.”
The ISDA paper targets three specific areas for improvement: documentation, data, and processes, responding to a longstanding need for new solutions in light of recent regulatory changes.
“Our members are looking for more effective, less costly and less complex processes, using technology where possible to cut down on manual processes,” O’Malia said. “ISDA is helping to respond to these issues, and our whitepaper highlights a number of areas where the Association can work with the industry and regulators to improve trade processing through the lifecycle.”