ISDA’s 2021 Definition Hit “Key Adoption Landmark”
Posted by Colin Lambert. Last updated: April 12, 2022
ISDA and post-trade services provider Osttra have announced that the interest rate derivatives market has overwhelmingly transitioned to the 2021 ISDA Interest Rate Derivatives Definitions, hitting a key adoption landmark six months after implementation.
All major central counterparties incorporated the new definitions into their rule books in the last quarter of 2021, meaning all legacy and new cleared trades reference the 2021 Definitions, accounting for approximately 75% of the total interest rate derivatives market. Latest figures from Osttra’s MarkitWire platform show that 68% of non-cleared interdealer and 65% of non-cleared client interest rate derivatives electronically confirmed on the platform also now reference the new definitions. That compares with around 15% in October 2021, after the definitions went live.
Version five of the 2021 Definitions, published in March, was the first update not to be accompanied by a corresponding revision to the 2006 Definitions via a supplement, ISDA explains, adding a further three updates to the 2021 Definitions are planned for this year.
The 2021 Definitions represent the first major overhaul of the definitional booklet since 2006 and are the first to be published in natively digital form, creating significant efficiencies in how firms use and interact with the definitions.
“The latest figures show the market has reached a tipping point in the adoption of the 2021 Definitions’” says Scott O’Malia, ISDA’s chief executive. “This is now the de facto market standard for interest rate derivatives. Given ISDA has now stopped updating the old 2006 Definitions, the 2021 Definitions will be the only ones to fully reflect current market practices and regulatory requirements. We will continue to work with market participants and infrastructure providers to accelerate adoption even more broadly.”
Guy Gurden, head of rates and credit product management at Osttra, adds, “At the heart of Osttra’s mission is driving maximum post-trade efficiencies via our shared trade processing services. As a result, we’re committed to supporting the ongoing transition to the 2021 Definitions. We worked in partnership with ISDA and the industry to ensure our infrastructure was ready for a safe and efficient transition from the implementation date – and will continue to provide transparency around adoption metrics to encourage the widest possible uptake over the coming months.”
The new definitions consolidate the 91 supplements to the 2006 ISDA Definitions into a single electronic booklet, reducing complexity and the potential for error. Each time updates are required, a revised digital version of the 2021 Definitions is republished in full, eliminating the need for further supplements.