Executive summary

In our previous paper, titled Transforming the markets middle office¹, we noted that a transformation programme would aim to achieve one of the following pillars of transformation:

i) consolidation of disparate systems, data sources, and redundant processes,
ii) increased controls to enable availability of reliable position, exposure, cash, and risk data for fast-track decision-making, and
iii) regulatory compliance.

The automation of exotic-trade confirmations, which we explore in this paper, is part of the consolidation pillar.

International Swaps and Derivatives Association (ISDA) confirmations are vital for validating trade agreements in the derivatives market.

For exotic products, these confirmations are traditionally managed manually, which can lead to inefficiencies and errors. That said, investments in advanced technology to enable automation can help enhance speed, accuracy, and cost-effectiveness.

This paper discusses the industry practices, way forward, impediments, and our solutions for automating ISDA confirmations of exotic products.

¹ https://www.crisil.com/en/home/our-analysis/reports/2024/07/transforming-the-markets-middle-office.html