Of Standards and Technology: ISDA and Technological Change in the OTC Derivatives Market

Forthcoming in (2021) Law and Financial Markets Review

37 Pages Posted: 21 Mar 2022 Last revised: 2 Nov 2022

See all articles by Pierre Schammo

Pierre Schammo

Durham University, School of Law; EUSFIL Jean Monnet Centre of Excellence

Date Written: March 16, 2022

Abstract

For enthusiasts, distributed ledger technology and smart contract technology promise a future of frictionless interactions and decentralisation. In practice, however, it is widely acknowledged that this vision faces significant challenges. These include legal challenges, technological challenges, but also implementation challenges. The latter arise because delivering the DLT/SCT vision does not take place in a vacuum, but in a setting populated by existing market actors that operate on the basis of pre-existing technologies and absent an industry-wide layer of standards to support technological change and the vision of frictionless interactions. This article seeks to contribute to the literature interested in implementation challenges. Its aim is two-fold: to examine implementation challenges and to take stock of current market efforts to overcome them. In particular, this article focusses on the efforts of the International Swaps and Derivatives Association (ISDA) and its initiatives to ‘standardise to digitise’. It will show that these initiatives can usefully be examined as an attempt to help the industry coordinate on a common foundational standards layer. However, this article also finds that the success of ISDA’s efforts is by no means certain. Nor are its efforts without raising some concerns.

Keywords: ISDA, standardisation, derivatives, blockchain, DLT, smart contracts, coordination, focal points

JEL Classification: K00, K10, K22, K12, L15, L51, O33

Suggested Citation

Schammo, Pierre, Of Standards and Technology: ISDA and Technological Change in the OTC Derivatives Market (March 16, 2022). Forthcoming in (2021) Law and Financial Markets Review , Available at SSRN: https://ssrn.com/abstract=4059245 or http://dx.doi.org/10.2139/ssrn.4059245

Pierre Schammo (Contact Author)

Durham University, School of Law ( email )

The Palatine Centre
Stockton Road
Durham, Durham DH1 3LE
United Kingdom

EUSFIL Jean Monnet Centre of Excellence ( email )

Italy

Do you have negative results from your research you’d like to share?

Paper statistics

Downloads
122
Abstract Views
515
Rank
417,807
PlumX Metrics