ISDA Confirmations - Best Practices
The following ISDA confirmations can be generated for Swap,Swaption, SwapCrossCurrency and FRA trades.
| • | "TerminationConfirmation.html" - Template used to confirm a Full or Partial Early Termination. |
| • | "NovationConfirmation_OR.html" - Template used to confirm a Full or Partial Novation. Remaining Party is the sender and Transferor is the receiver. |
| • | "NovationConfirmation_EE.html" - Template used to confirm a Full or Partial Novation. Remaining Party is the sender and Transferee is the receiver. |
| • | "FeeNovation.html" - Template used to confirm the fee following a Novation, exchanged between the Transferor and the Transferee. Transferee is the sender and Transferor is the receiver. |
| • | "Exhibit_LongForm.html" - Template included in "derivatives.html" in case there is no ISDA Master Agreement signed between the 2 parties of the trade. |
| • | ExerciseConfirmationIRD.html - Template to confirm a Swap or Swaption exercise. |
Novation Confirmations
The different cases of Novation are:
| • | The counterparty is the transferor (or step-out) of the novation |
| • | The counterparty is the remaining party of the novation |
| • | The Processing Organization is the transferee (step-in of the trade) |
Whatever the case, the standard is that only the remaining party generates the Novation agreement that is sent to both the transferor and the transferee . The resulting trade between the transferee and the remaining party is confirmed as a "new" trade.
| • | When the Processing Organization is the remaining party, the bank sends a novation agreement to both the transferor and the transferee. This agreement is composed of: general terms of the novation, an annex describing the initial transaction between remaining party and transferor, and an annex describing the new transaction between remaining party and transferee. |
The transferor and the transferee have to sign this agreement to validate the novation.
The Novation Fee is the document exchanged between the transferor and the transferee following a Novation to confirm the fee to be paid or received between the two parties. Only the transferee should send this confirmation.
| • | When the Processing Organization is the transferee, a novation agreement is sent by the remaining party and has to be signed and returned. In parallel, the bank sends a “Novation Fee” confirmation to the transferor. |
VERIFIED_TRADE Confirmations
Confirmations are generated for:
| • | New trade, Amended trade to send to Counterparty |
| • | Remaining Trade following a Partial Termination to send to Counterparty |
| • | Remaining Trade following a Partial Novation when PO is the Remaining Party to send to Transferor |
| • | New Trade following a Full Novation when PO is the Remaining Party to send to Transferee (Counterparty of the new trade) |
| • | New Trade following a Partial Novation when PO is the Remaining Party to send to Transferee (Counterparty of the new trade) |
| • | Reject on Partial Termination / Novation / Partial Novation |
TERMINATED_TRADE Confirmations
Confirmations are generated for:
| • | Full Termination to send to Counterparty |
| • | Full Novation to send to Transferor |
| • | Amend of a Termination |
| • | Cancellation of a termination (“Reject”) - Resulting VERIFIED_TRADE will not generate any confirmation |
Verified and canceled Payment / Receipts
Confirmations are generated for:
| • | Novation Fee sent by Transferee to Transferor (case of new trade following a Novation when PO is the Transferee) |
| • | Advice Payment or Receipt after fixing of Floating Rate and/or FX reset: no netting, netting per trade |
Recommended Message Configuration
Message Type = Confirmation
| Event | Receiver Role | Address Type | Gateway | Format | Template | SDFilter |
|---|---|---|---|---|---|---|
|
CANCELED_PAYMENT |
CounterParty |
FAX |
PRINTER |
|
FeeNovation.html |
MSG_FeeNovation |
|
CANCELED_RECEIPT |
CounterParty |
FAX |
PRINTER |
|
FeeNovation.html |
MSG_FeeNovation |
|
CANCELED_TRADE |
CounterParty |
FAX |
PRINTER |
|
derivatives.html |
MSG_VER_GenericIRD |
|
CANCELED_TRADE |
CounterParty |
SWIFT |
SWIFT |
SWIFT |
MT340 for FRA MT360 for Swap MT361 for SwapCrossCurrency |
MSG_VER_GenericIRD |
|
CANCELED_TRADE |
CounterParty |
FAX |
PRINTER |
|
TerminationConfirmation.html |
MSG_VER_Term |
|
TERMINATED_TRADE |
CounterParty |
FAX |
PRINTER |
|
NovationConfirmation_OR.html |
MSG_TERM_NovFull |
|
TERMINATED_TRADE |
CounterParty |
FAX |
PRINTER |
|
TerminationConfirmation.html |
MSG_TERM_term |
|
VERIFIED_PAYMENT |
CounterParty |
FAX |
PRINTER |
|
FeeNovation.html |
MSG_FeeNovation |
|
VERIFIED_RECEIPT |
CounterParty |
FAX |
PRINTER |
|
FeeNovation.html |
MSG_FeeNovation |
|
VERIFIED_TRADE |
CounterParty |
FAX |
PRINTER |
|
derivatives.html |
MSG_VER_GenericIRD |
|
VERIFIED_TRADE |
CounterParty |
SWIFT |
SWIFT |
SWIFT |
MT340 for FRA MT360 for Swap MT361 for SwapCrossCurrency |
MSG_VER_GenericIRD |
|
VERIFIED_TRADE |
CounterParty |
FAX |
PRINTER |
|
NovationConfirmation_EE.html |
MSG_VER_Nov_EE |
|
VERIFIED_TRADE |
CounterParty |
FAX |
PRINTER |
|
NovationConfirmation_OR.html |
MSG_VER_Nov_OR |
| EXERCISED_TRADE |
CounterParty |
PRINTER | HTML | ExerciseConfirmationIRD.html | ||
| CANCELED_TRADE |
CounterParty |
PRINTER | HTML | ExerciseConfirmationIRD.html | ||
| EXERCISED_TRADE |
CounterParty |
PRINTER | HTML | ExerciseConfirmationIRD.html | ||
| CANCELED_TRADE |
CounterParty |
PRINTER | HTML | ExerciseConfirmationIRD.html |
Static data filters:
"MSG_GenerateConfirmIRD" is used as common filter for this scope. Confirmation does not have to be generated for:
| • | A bundle transaction |
| • | Interbook transactions |
| • | Trade executed on an execution platform, post-trading platform (MarkitWire hereunder) |
| • | Missing information on receiver and sender referring to Address Type defined in Message Setup |
For Termination:
For Novation:
How are we doing?