Trade Matching & Confirmation

Trade Matching

Status: Under Review, Last Updated: 09/11/2020

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The process of trade matching is intended to ensure that transactions, once input into the security settlement system (SSS) at a CSD or ICSD, do not fail to settle because of instruction mismatches.

It is not recommended that counterparties rely purely on trade matching at the SSS for verification of the terms of transactions, as this usually reduces the available time to correct mistakes or resolve disagreement. This in turn may lead to an unexpected build-up of risk.

Once a transaction negotiation concludes, counterparties should promptly verify the terms of the transaction, through trade confirmation and response, prior to input to respective security settlement systems. This procedure will mitigate the risk of trade mismatches and avoid trades being set up with economic differences.

It is recommended that a market vendor is utilised for such trade matching, and that the counterparties to the trade send files to the vendor for comparison at least every 15 minutes, thus allowing pre-matching to occur as soon as possible. The data sent to the vendor should contain all relevant fields for comparison, including the SSIs such that they can also be compared prior to the CSD/ICSD. See IBP-153 for more information on contract compare. (IBP-118)

Confirmation

Status: Under Review, Last Updated: 07/08/2020

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Confirmation is the process of providing a complete record of the commercial terms of a transaction and settlement instructions to the other party. The provision of a Confirmation allows the recipient to cross-check the sender's record of the terms of a transaction against the recipient's own records. Confirmations can also be used during the life of a transaction to verify changes. Counterparties should clarify prior to undertaking any transactions if they intend to provide confirmations, in what timeframe, and any expectations they have in relation to confirmations, of the other counterparty. If counterparties agree not to use confirmations, it is strongly encouraged that a robust Trade Matching and post-trade Contract Compare process is in place between the parties in order to mitigate risk.

For further information regarding notifications, please see Chapter 'Processes for Loans' Section 'Notifications'

  (IBP-119)

New Loan Booking

Status: Under Review, Last Updated: 07/08/2020

Timestamp
To support SFTR reporting, it is recommended that both parties to a transaction book a new loan within one hour of its negotiation. See https://www.islaemea.org/isla-best-practice-handbook/subsection/SFTR-32/" target="_blank">Execution Timestamp (Field 2.12) and Execution Timestamp (Voice Trades) Booking Practices (IBP-296)

Fields

Status: Under Review, Last Updated: 23/02/2021

Trade Date
The trade date for a new loan is the date the loan is negotiated.

For any loan returning activity, the Trade Date should be the date that closing action is notified by the initiating party.

Although market participants may then match counterparty instructions, to reduce settlement instruction mismatch, this practice should not be considered as market standard. (IBP-329)