Our free FinTech update also covers a CFTC departure, Broadridge’s LTX platform, and SS&C’s relationship with SJP.
Pilot Also Uses the Digital Asset Modeling Language
ISDA’s Common Domain Model (CDM) was part of a proof-of-concept implementation that clears interest rate derivatives with the help of an open-source smart contract language, the Digital Asset Modeling Language (DAML) from vendor Digital Asset, officials say.
“Using the CDM for clearing and deploying it on a distributed ledger with DAML will remove the burden of setting up connections to incongruous systems and services, facilitating interoperability, automation and straight-through processing (STP),” according to officials at the International Swaps and Derivatives Association.
“This pilot takes the CDM model for clearing and adds new features for the signing of state transitions, data ownership and privacy elements, which are necessary to put the CDM clearing model into production. Those elements are inherent within DAML as features with native support,” ISDA officials say. “The resulting new models will initially exist as complementary artefacts on the CDM portal and may eventually be integrated into the core CDM with those new features included.”
In addition, the Australian Stock Exchange (ASX) and Swiss banking giant UBS “have been providing input to validate additional functionality of the CDM alongside ISDA and Digital Asset, officials add.
“Defining CDM artefacts for derivatives clearing directly in DAML will help market participants leverage and implement the CDM more effectively while providing interoperability and driving adoption,” says Kelly Mathieson, chief client experience officer at Digital Asset, maker of distributed ledger technology (DLT) tools and solutions.
ISDA reports that it has been working with Digital Asset for two years to develop an open-source reference code library in DAML to help with the adoption of the CDM.
“The event specification module was built to simplify and standardize the process of generating lifecycle events defined in the CDM. The concepts found in the event specification module have since been built into the core CDM as native functions,” ISDA reports. The CDM is intended to serve as a common blueprint for events that occur throughout the derivatives lifecycle
CFTC’s Enforcement Director to Leave
The CFTC’s Division of Enforcement Director James McDonald will leave the agency on Oct. 8, after helping the regulator through a “momentous year,” officials say.
McDonald will be replaced by Vincent McGonagle, principal deputy director of the Division of Enforcement, will serve as the acting director, officials say.
McDonald, who has served as director since April 2017, “led the Division of Enforcement to its most momentous year in our 45-year history, which is a testament to his vision and leadership,” says Heath P. Tarbert, CFTC chairman, in a prepared statement.
The enforcement director bolstered the division’s capabilities “to detect misconduct through data and analytics, strengthened relationships with other regulators and criminal authorities through parallel enforcement, and increased transparency,” Tarbert says.
During. McDonald’s tenure, the division identified and advanced five main priorities: preserving market integrity, including a data analytics program; protecting customers in traditional markets and those working in digital assets; promoting individual accountability and pursuing accountability up the chain; enhancing coordination with other regulators and criminal authorities; and increasing transparency in operations via numerous pieces of guidance and advisories about the division’s policies and practices, officials say.
Before the CFTC, McDonald was an assistant United States Attorney in the Southern District of New York, and prior to that, he worked in private practice at the law firm of Williams & Connolly LLP.
He has also worked as a law clerk to John G. Roberts Jr., Chief Justice of the United States, and Jeffrey S. Sutton, Jr., Judge on the United States Court of Appeals for the Sixth Circuit, and as a deputy White House counsel in the Office of White House Counsel, officials add.
Broadridge’s LTX Uses 7 Chord’s Corporate Bond Prices
LTX, the digital corporate bond trading platform from Broadridge Financial Solutions, will be using 7 Chord, a predictive pricing and analytics vendor, as the source for intraday corporate bond prices to facilitate the platform’s artificial intelligence (AI)-driven capabilities, officials say.
The advanced analytics of LTX will be integrated with BondDroid, 7 Chord’s predictive pricing engine for bonds, officials say. The goal is to offer buy-side firms and dealers independent assessments of current market value to bolster investment decisions.
“BondDroid’s AI-generated prices are integrated directly into LTX’s pre-trade analytical tools, giving dealers and institutional investors a complete view into actual market liquidity before they trade, while controlling information leakage and at no additional cost to LTX users,” according to Broadridge.
The LTX platform is offering dealers and institutional investors “greater insights into pre-trade price transparency and liquidity,” says Vijay Mayadas, president, capital markets at Broadridge, in a prepared statement.
LTX has a digital trading protocol, RFX, that help dealers aggregate liquidity across multiple counterparties in seconds. “Identifying the natural counterparties for a trade depends on a realistic understanding of fair market value. Built on streaming data and optimized for live trading, BondDroid uses AI to quickly adapt its behavior in real-time to variations in pricing,” officials say.
The initial version of the LTX platform was launched earlier this year.
SS&C Extends Contract with U.K. Wealth Manager
British firm, St. James’s Place Wealth Management (SJP) has “renewed and extended its administration relationship” with SS&C Technologies, which covers its U.K. life insurance, unit trust management, pensions and investment administration business lines, officials say. SJP switched to SS&C in 2014.
SJP has extended its relationship with SS&C for another five years through to 2034, officials say.
In 2019, the firm moved onto SS&C’s Bluedoor platform to provide clients “a single consolidated view across all pensions and savings products,” officials say. “Bluedoor has been implemented as an operationally ready business process outsourcing solution for SJP, which now administers over £100 billion of funds under management on the platform.”
“The performance of SS&C, especially during the global pandemic, has played a significant part in enabling SJP to excel in the current environment. We were especially impressed by how SS&C adapted its operations to allow the vast majority of their colleagues, who we view as being part of the extended SJP community, to work remotely and thereby to protect their safety and that of their families and communities,” says Ian MacKenzie, chief operations and technology officer at SJP, in a prepared statement.