ISDA Common Domain Model

The International Swap Dealers Association (ISDA) has been leading efforts to standardize the modeling of financial instruments for many years, including the development of the widely-used Financial products Markup Language (FpML) in 1999.

FpML was developed to standardize the communication of complex derivatives contract information between counter-parties, and it succeeded in simplifying messaging of key data. Even with standardized messaging, firms still used individual processes to model, persist, and value complex derivatives. In a coordinated effort to address this issue, ISDA, in partnership with its member firms, recently released the first version of the ISDA Common Domain Model (ISDA CDM).

As defined by ISDA, the CDM is designed to be a “standardized model for the post-execution trade lifecycle, focusing on the non-differentiating aspects of that trade lifecycle that are candidates for mutualization by the industry.”

ISDA CDM, serving as a data model specification, is agnostic to technology implementation, although ISDA has mentioned that the specification “is targeted at distributed ledgers (DLs) to exploit their embedded lineage and consistency properties.”

Distributed ledgers are designed to automate data and synchronize state, so layering a common domain model on that infrastructure can help achieve the core goal of enabling all counterparties to be fully synchronized on the state of their derivatives contracts.

With regards to unified blockchain implementations of the ISDA CDM specification, the programming language choice for that data model will inherently be a critical decision.