Pairing & Matching Process

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Status: Best Practice Finalised, Last Updated: 15/02/2024

Question:

Understanding the trigger for the “pairing & matching process”

1. 1. The transaction state report (sometimes called the TSR or trade state report) is the input to the pairing & matching process.
2. 2. The TAR Trade Activity Report (ESMA call this the DAR - daily activity report) is all submissions accepted by the Trade Repository for a given day, not all submissions update the TSR.
3. 3. The TAR is not the input to the Pairing & Matching process.
4. 4. All eligible for reconciliation submissions are paired first.
5. 5. The reconciliation process pairs and matches positions. The reconciliation process at DTCC therefore includes the following stages:

   • Intra-TR Pairing: This process locates the other side of the trade or collateral, based on the unique keys defined within DTCC’s TR. Pairing is based on the three fields when an accepted submission is first made for a particular trade with that unique key, Reporting Counterparty, Other Counterparty, and Unique Transaction Identifier.
   • Intra-TR Matching: If the other side of the trade is located (paired) within DTCC’s TR, the reconcilable fields on both records are compared and the outcome is provided.
   • Inter-TR Pairing: If the other side of the trade or collateral is not located within DTCC’s TR, the TR attempts to locate this information at the other registered TRs, based on the unique key (Reporting Counterparty + Other Counterparty + Unique Transaction Identifier).
   • Inter-TR Matching: If the other side is located (paired) at another TR, the reconcilable fields on both records are exchanged and compared. The outcome is then provided.
   • The trade is assigned a status of Unpaired if the other side of the trade cannot be located. Both the loan and any linked collateral are excluded from the reconciliation process for trades with a status of Unpaired.
   • The reconciliation process therefore is made up of Pairing and then Matching.

Best Practice:
(SFTR-821)