TradeHeader at the ISDA AGM in Chicago

Last month, I had the opportunity to attend to the ISDA AGM 2023 with Marc, this was my second attendance to this conference. Last year I was a rookie there but this one I’ve upgraded to a “Pro” as reflected in my credentials.  😊

It was in Chicago, so I felt excited when I knew it. This was one of the USA cities I had on my list to visit at least once in my life. The days before travelling we were planning a bit with Marc and we knew in advance that this was going to be an exhausting week because of the travelling, the jet lag, the presentations, the networking, and so on.

So, we met each other at the Barcelona airport on Monday morning, ready for the upcoming week and we rapidly agreed that we were going to rely on the coffee, and let it do its work. We spent the day travelling, arriving at Chicago in the evening, just in time to accommodate us in the hotel and rest a bit before the work started.

Tuesday started well, so the room had awesome views to the Lake Michigan, what gave me a fantastic sunrise gift every morning, not a bad way to start the day, I thought.

After a good American breakfast, we met with our partners from REGnosys. It was nice to work in person with people you are used to do it remotely in a daily basis. We spent the morning preparing some presentations and structuring the talks that Marc was going to present. This year we were present at the ISDA Pre-AGM Meetings. There were 2 main topics discussed there:

• Regulatory changes, accounting and documentation in the digital assets including cryptocurrencies, environmental, social and governance (ESG) related transactions and their impact on derivatives, on one side. 
• And The Journey to Digital Regulatory Reporting: A Modern Approach to an Old Problem, on the other.
  
  

We, at TradeHeader, have been involved in the CDM development and the Digital Regulatory Reporting (DRR) initiative implementation for the last two years, so Marc was in the panel of that second topic sharing knowledge with some other interesting panelists.

Just an overview of the project for those who are not familiar with it:

• the ISDA Common Domain Model (CDM) is a standardized, machine-readable, and machine-executable blueprint for how financial products are traded and managed across the transaction lifecycle. It is represented as a domain model and distributed in open source.
• The Global Digital Regulatory Reporting (DRR) program is a cross industry initiative to transform the reporting infrastructure so that all reporting entities implement rules consistently and cost effectively. DRR achieves this by delivering an open-source, functional expression of the reporting rules that can be used as machine-executable code in firms’ own implementations.
• DRR is built as an extension of the Common Domain Model (CDM). It uses the CDM to represent the transaction data input into the reporting process. It conforms to the CDM’s design principles where data and functions are used to model reportable fields and logic, respectively.

My first thought when I saw the panel went to the TradeHeader DRR team. They have been doing an outstanding work on the CDM development and on the DRR initiative. Marc and I took the opportunity to be there, but that wouldn’t be possible without the continuous effort and commitment of the whole DRR team, Manel, Georgina, Manu, Jan, Gerard, and Eric you guys were somehow present too.

The day ended at the Welcome Reception in the Morgan Manufacturing, where we made some networking, enjoyed live music, knew a bit about the history of the Windy City and tasted some foods and drinks.

The ISDA AGM 2023 started on Wednesday officially with the opening remarks from Scott O’Malia, the Chief Executive Officer at ISDA. The main topics he mentioned to open the conference were:

• The Voluntary Carbon Market as an important area in the transition to a sustainable economy.
• And the ISDA digital initiatives
  • The ISDA SIMM, which has become the industry standard for calculating initial margin.
  • ISDA Create, which is used by more than 300 firms around the world to negotiate key documentation online.
  • Perun, ISDA’s award-winning quantitative analysis platform that helps ensure consistent and accurate implementation of standardized capital models.
  • MyLibrary, our digital documentation platform that now hosts more than 85 flagship documents.
  • And the Common Domain Model (CDM), a free-to-use data standard for financial products, trades and lifecycle events. The CDM has been put to work in the derivatives market in two key areas. Regulatory reporting rules on one side, and collateral management on the other.

We took the opportunity to assist at an Odd Lots Podcast live recording interview. It was so interesting to hear Rostin Behnam, Chairman, U.S. Commodity Futures Trading Commission (CFTC) on the fight to regulate Crypto. Among the things they discussed were what constitutes a security or a commodity, market structure questions, new types of betting markets, and other matters currently facing the CFTC.

During the rest of the day we were manly focused on the CDM Expo, which was a new initiative in the AGM. There were a series of conferences focused on different CDM use case implementations running in parallel with the main AGM schedule.

Marc took the opportunity to present the work we do at TradeHeader to the audience, and the CDM and DRR Services we have been working on for the last years. That gave us lots of visibility. Although the number of assistants were reduced, the ones who attended were very interested in the topic, that allowed us to share some impressions directly with them and make interesting new contacts. These one-to-one conversations are critical to know the industry interests and the fears of moving to new implementations. It is always good to zoom out from the daily work and take a new perspective, that’s something that help us to better understand the industry requirements and motivate us to keep pushing through achieve our goals. 

Besides that, there were some interesting presentations on the Collateral side, REGnosys talked about Collateral and Building an Eligible Collateral Schedule in the CDM Object Builder, and Adenza presented their platform for Collateral management; Bloomberg talked about swap and swaptions lifecycle events with the CDM model. 

Beyond the CDM Expo, in the main AGM schedule, it was an interesting discussion on “Regulatory Reporting 2.0” where panelists discussed about how global regulators are amending their derivatives reporting rules to incorporate globally agreed standards, marking a big step towards greater global consistency in rule sets. With the US Commodity Futures Trading Commission’s amended rules coming into force on December 5, 2022, attention has turned to forthcoming changes in the EU, Asia-Pacific and elsewhere. What will these changes mean for financial institutions and how can digital solutions help with implementation? were some of the questions raised there.

The day ended at the Evening Reception in the Field Museum, a place that connect all of us to the natural world and the human story. We enjoyed the networking time there.

Thursday started with an early morning run, just to get some views from the skyline of the city and enjoy the Lake Michigan shore, I have a mission in my mind: “to find the mirror bean”, otherwise no one would believe that I had been in Chicago… So, mission succeeded.

We continued focused in the CDM Expo, Marc presented the CRIF generation using CDM use case to the audience (there is an interesting in-depth article on that topic in our previous newsletter #2) and the DRR implementation jointly with REGnosys. Some other talks about CDM for Collateral Management from Vermeg or FINOS presentation took place to conclude the Expo.

On the AGM general schedule there were some interesting discussions about “Trading Green Assets” and the work to develop a robust, global voluntary market for trading carbon credits, trying to evaluate what issues remain outstanding and how are market participants using other ESG-related products, indices, and derivatives to achieve their sustainability objectives.

Regarding “Crypto Derivatives Definitions”, ISDA has published standard definitions for cash-settled forwards and options referencing Bitcoin and Ether to bring greater clarity to this nascent class, but the standards could be extended to other product types – and could also be applied for smart contracts executed on distributed ledger technology (DLT). What are the key provisions of the new definitions, how does the innovative new drafting style support DLT and smart contracts, and what are the next steps? were some of the open questions discussed there.

And last but not least, we attended the talk “Developing Robust Derivatives Markets”. We know that legislation ensuring the enforceability of close-out netting is expected in Saudi Arabia this year. Following the implementation of China’s Futures and Derivatives Law last year, it means all the Group-of-20 nations will have netting legislation in place. How does this critical step help the development of robust, liquid domestic capital markets, and what should come next? were some of the items discussed there.

From there to home we had some hours of travelling that gave us some time to evaluate the whole week. 

From a personal point of view, it has been a rewarding experience. It is always good to take some perspective from the daily basis work and take the whole picture from a different angle. Although sometimes one feels himself “like a fish out of the water” when attend these events, I believe that certain degree of exposure is critical to progress. Certainly, this type of experiences somehow improve soft skills like communicative ones, and self-confidence, they also give some fresh air to the mind keeping the motivation and commitment at place. It’s been six and a half years since I joined the TradeHeader team, “Always learning” has been my motto ever since. It’s been a pleasure share those days with Marc, who always surprise me in terms of managing different types of situations. His outstanding degree of knowledge based on his expertise is a mirror to look at. So, sharing conversations with Marc, always means learning and this translates into growing up.