ISDA Releases First Digital Definitions for Interest Rate Derivatives

Fazzaco learned that International Swaps and Derivatives Association​ (ISDA) has issued an updated and enhanced version of its landmark definitional booklet for interest rate derivatives, which marks a giant step in the transformation to digital documentation.

The 2021 ISDA Interest Rate Derivatives Definitions are the first ever to be published as a natively digital definitional booklet, and are available via ISDA’s new electronic documentation platform, MyLibrary. The digital format will create significant efficiencies in how firms use and interact with the definitions, reducing complexity and the potential for error.

The new definitions consolidate the 70-plus supplements to the previous ISDA 2006 Definitions into a single electronic booklet for ease of use. In the future, ISDA will republish a revised digital version of the 2021 Definitions in full each time updates are required, eliminating the need for further supplements. Users will be able to easily access a single golden-source version of the definitions that applied at the time of any trade, as well as compare different versions of the definitions via the MyLibrary platform.

Scott O’Malia, ISDA’s Chief Executive, said: “Interest rate derivatives are the largest segment of the derivatives market, with a gross market value of $11.3 trillion. It’s therefore vital that firms are able to easily determine the terms of their trades without having to manually pull together the definitional booklet plus 70-odd supplements in paper or PDF form. Advances in technology mean we can publish the 2021 Definitions digitally, making that process much quicker and more efficient and reducing the potential for error. The financial services industry can’t continue to live in paper-based ecosystem when the rest of the world is moving to a completely digital strategy.”

The 2021 Definitions are scheduled for implementation over the weekend of October 2/3, 2021. While firms can continue to use the 2006 ISDA Definitions, ISDA will stop updating them following implementation of the 2021 Definitions.