Kennett Square, PA [October 25, 2019] — Chatham Financial, an independent financial risk management firm, today announced that its technology team earned the Best Solution Architecture Award at Barclays DerivHack 2019 in New York. This is the second consecutive year that Chatham’s team has won the award. The Chatham Financial team included Eli Faulkner, Ethan Giordano, John Bagatta, and Kyle Hopkins.
The Hackathon, which took place simultaneously in New York, London, and Singapore on October 16 and 17, enabled market participants across the industry to innovate on the use of common repositories in post-trade processing. Participants were challenged to simulate the interaction model among the common repository, broker-dealers and clients using International Swaps and Derivatives Association’s (ISDA) Common Domain Model (CDM). CDM is being developed to serve as a standard, digital blueprint for how derivatives are traded and managed across their lifecycle. The teams were asked to code and showcase solutions that will increase the efficiency of OTC derivative and security processing, specifically post-trade processes, from the point of trade execution right through to settlement and collateral.
“As Chatham continues to provide regulatory solutions to our clients, it’s important for our technologists to practice the implementation of the ISDA CDM in order to understand its functionality,” said Elizabeth Thorwart, product manager of regulatory technology at Chatham Financial and a member of the 2018 winning team. “We have a responsibility to provide feedback regarding the performance of the CDM on behalf of end users, ensuring the model works as well for them as it does for dealer banks. This year’s win demonstrates that we have continued to fulfill this responsibility.”
Barclays hosted DerivHack 2019 in partnership with ISDA. Additionally, Digital Asset and R3 each provided a ledger-as-a-service to simulate a common repository for CDM-based applications. Participants explored ways to externalize aspects of post-trade processing to unlock material savings and efficiencies in the derivatives and securities industry.
In recognizing the overlap between the CDM events for Allocation, Affirmation and Confirmation in the use cases, the team simplified the trade lifecycle by compounding the Affirmation and Confirmation Events within the Allocation process. By vastly simplifying the lifecycle, the blockchain captures CDM data and lineage, resulting in a simplified implementation. In the solution Chatham architected, a broker-dealer could propose a trade allocation to a client, whose affirmation would automatically generate the state changes necessary for newly allocated trades and their regulatory confirmations. This method offered a new way of approaching an existing manual process, currently handled as three separate steps, as one automated action. Chatham’s team leveraged DAML, an open source smart contract language from Digital Asset, to create their solution.
In addition to providing an analysis on the functionality of the ISDA CDM, Chatham’s team also provided feedback regarding the newness of the solution’s toolchain. As the team had implemented a solution on Ethereum at 2018’s DerivHack, the judges had interest in a comparison of Chatham’s experiences wanting to understand where additional implementation benefits could be obtained.
“In the face of growing regulation, the derivatives industry has slowed market innovation to focus on trade processing efficiency. Through investment in technology like the ISDA CDM I see a future where efficiency and innovation can co-exist in markets that are safe and transparent for participants. Events like DerivHack help solidify the technology and move us toward that future.” said Eli Faulkner, director of Chatham Financial’s capital market platform.
Chatham will continue participation in ISDA CDM Working Groups, which will allow Chatham to share its technical expertise and provide feedback on the model and its implementation.
Chatham’s technology team develops and maintains the ChathamDirect platform, technology models, and quantitative analytics in the areas of financial risk management, hedge accounting, derivative and debt valuations, debt management, and defeasance.
About Chatham Financial
Chatham Financial is the largest, independent financial risk management advisory and technology firm. Founded in 1991, Chatham Financial pioneered the debt and derivatives field, providing clients with access to in-depth knowledge, innovative tools, and an incomparable team to help mitigate risks associated with interest rate, foreign currency, and commodity exposures. Today, the organization of over 600 serves more than 2,500 companies across a wide range of industries — handling roughly $600 billion in transaction volume and helping businesses maximize their value in the capital markets, every day. To learn more, visit chathamfinancial.com.
On behalf of Chatham Financial