SBVR and Traceability Demonstration using the Property & Casualty Vocabulary

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1 SBVR and Traceability Demonstration using the Property & Casualty Vocabulary Object Management Group / Enterprise Data Management Council Joint Working Group Meetings March 23, 2011 Donald Chapin Co-chair OMG Business Modeling & Integration Domain Task Force OMG Liaison to ISO TC 37 and its Subcommittees Co-chair OMG SBVR Revision Task Force ISO TC 37/SC 1/WG 5 Project Leader for SBVR Member, Terminology Subcommittee, British Standards Institute Business Semantics Ltd. London, UK Donald.Chapin@BusinessSemantics.com John Hall Co-chair OMG Regulatory Compliance SIG Chair OMG BMM Revision Task Force Model Systems London, UK John.hall@modelsystems.co.uk

37/SC 1/WG 5 Project Leader for SBVR Member, Terminology Subcommittee, British Standards Institute Business Semantics Ltd. London, UK Donald.Chapin@BusinessSemantics.com www.

2 Regulatory example Each derivatives clearing organization shall complete money settlements on a timely basis, but not less frequently than once each business day. Source: Dodd-Frank Wall Street Reform and Consumer Protection Act, Section 725(c)(2)(E)(i ) Business Semantics/Model Systems SBVR and Traceability Demonstration using the Property & Casualty Vocabulary 2

Source: Dodd-Frank Wall Street Reform and Consumer Protection Act, Section 725(c)(2)(E)(i )

3 Initial (partial) SBVR Styling It is obligatory that each derivatives clearing organization completes money settlements [on a timely basis, but] at least once each business day. Alternative syntax: Editorial can discard Each derivatives clearing organization must complete money settlements at least once each business day. Business Semantics/Model Systems SBVR and Traceability Demonstration using the Property & Casualty Vocabulary 3

Alternative syntax: Editorial can discard Each derivatives clearing organization must complete money

4 SBVR Styling It is obligatory that each business day includes at least one money settlement completed by each derivatives clearing organization. Fact types (verb concepts): business day includes money settlement derivatives clearing organization completes money settlement (implicit) synonym: money settlement is completed by derivatives clearing organization Business Semantics/Model Systems SBVR and Traceability Demonstration using the Property & Casualty Vocabulary 4

Fact types (verb concepts): business day includes money settlement derivatives clearing organization completes money

5 Noun Concepts derivatives clearing organization Adopted from the Commodity Exchange Act, Section 1a money settlement Not defined or explicitly adopted in Dodd-Frank Act Not defined (in context of derivatives) in US Code ISDA Glossary (Cash settlement): The discharge of an obligation by payment or receipt of a net cash amount instead of payment or delivery by both parties. Does money settlements in this rule mean at least one individual settlement or set of due money settlements? business day Not defined in Section 725 Defined in Section 210 ( for purpose of this paragraph ) as: Any day other than any Saturday, Sunday, or any day on which either the New York Stock Exchange or the Federal Reserve Bank of New York is closed. Is this fit for purpose of Section 725? Business Semantics/Model Systems SBVR and Traceability Demonstration using the Property & Casualty Vocabulary 5

org/c_and_a/oper_commit-dcg-glossary.html#m Does money settlements in this rule mean at least one individual settlement or set of due money settlements?

6 Verb phrases business day includes money settlement The completion date/time of the settlement is, or is after, the start time of the business day and is, or is before, the end time of the business day New noun concept: completion date/time New verb concept: money settlement has completion date/time What are the start and end times of a business day? For all business days? For all time zones? derivatives clearing organization completes money settlement What is completion of a money settlement? Business Semantics/Model Systems SBVR and Traceability Demonstration using the Property & Casualty Vocabulary 6

What are the start and end times of a business day? For all business days? For all time zones?

7 Exceptions Must a derivatives clearing organization have transactions due for money settlement on every business day? If not, how should the rule accommodate days when none are due: Extend the rule:... completed by each derivatives clearing organization that has due cash settlements Define a new noun concept based on business day: derivatives clearing organization day on which money settlements are due (and reformulate the rule) Assign a suitable enforcement level (probably best) Business Semantics/Model Systems SBVR and Traceability Demonstration using the Property & Casualty Vocabulary 7

.. completed by each derivatives clearing organization that has due cash settlements Define a new noun concept based on business day: derivatives

SBVR - Semantics of Business Vocabulary and Business Rules. Knut Hinkelmann

SBVR - Semantics of Business Vocabulary and Business Rules Knut Hinkelmann Content of the SBVR Standards SBVR is an OMG standard for formally describing business rules SBVR defines the vocabulary and rules