Ten years after the ISDA Standard Initial Margin Model launched in September 2016 alongside the first phase of uncleared margin requirements, ISDA is redirecting its efficiency agenda toward two technology-driven projects: tokenized collateral and 24/7 trading.

The association marked the SIMM anniversary earlier this month with an event and market close ceremony at the London Stock Exchange, co-hosted with LSEG Post Trade Solutions. ISDA attributes the model's decade-long role in non-cleared derivatives infrastructure to sustained risk-sensitivity work conducted with global regulators — a claim desks can measure against the model's periodic recalibrations, each backed by backtesting results submitted to regulators before implementation.

The SIMM solved a specific quantification problem: how counterparties calculate regulatory initial margin on non-cleared trades using a single, mutually recognized methodology. That mutualization logic now shapes ISDA's next workstreams, which extend beyond margin calculation to documentation negotiation, termination notice delivery and reporting-rule implementation through its set of shared digital solutions.

The 24/7 problem is a collateral problem

ISDA's argument, laid out in its anniversary commentary published September 1, 2026, links continuous trading directly to collateral mechanics. Systems built on daily processing cycles would require re-engineering for continuous, real-time operation, with middleware and third-party service providers available without interruption. Straight-through processing and greater automation become prerequisites, not enhancements.

The harder constraint is collateral itself. The most widely used collateral and funding instruments are not reliably available on weekends or holidays, which means continuous trading without continuous collateral movement would concentrate settlement and margin risk at exactly the moments traditional markets are closed. ISDA positions tokenized collateral as the near-term fix: a way to move margin around the clock without the bottlenecks participants face today.

What tokenization would change

The asserted benefits are concrete. Near-instantaneous settlement would reduce counterparty exposure windows. Intraday liquidity management would improve. Collateral mobility would increase. Tokenization could also admit money market funds as posted collateral — an asset class previously locked out by operational and legal barriers, which would let participants reduce reliance on cash and high-quality government securities.

These remain targets, not delivered outcomes. ISDA itself flags the unresolved questions: custody and segregation frameworks, capital and margin treatment, cross-border recognition, and legal certainty. The association draws a deliberate line on regulatory scope — the objective is adapting existing rules and standards where necessary, not constructing a new framework for tokenized assets in derivatives.

Proof of concept underway

The work has moved past principle. ISDA is currently running a tokenization proof of concept with member firms to test how ISDA documentation functions when used to exchange tokenized collateral. The exercise has a defined output: a list of updates needed to the association's credit support documentation and the supporting legal opinions. That gives derivatives operations and legal teams a concrete artifact to prepare for — revised credit support annexes, not a blank-sheet redesign.

For collateral desks, the timeline question is practical. Continuous margin movement requires clearing houses and participants to operate collateral chains — custodians, triparty agents, funding desks — on a 24/7 basis. The proof of concept addresses the contractual layer; the operational layer, from settlement infrastructure to weekend staffing and systems, remains a build-out item that each firm will have to cost and schedule.

Separating mandate from ambition

Nothing in the current agenda is mandated. SIMM itself was regulatory-driven — tied to the phased uncleared margin rules that began in 2016 — while tokenization and 24/7 trading are industry-initiated efficiency projects with no compliance deadlines attached. The distinction matters for budgeting: SIMM work came with supervisory expectations and implementation dates; the current workstreams carry adoption risk and depend on network effects that only materialize if enough participants move together.

Tokenized collateral takes the agenda slot at the ISDA Digital Assets Forum in Washington, DC on October 6, 2026, where the association and its members will detail how far the proof of concept has progressed and what documentation changes it implies.