For credit derivative trades, an automated system that DTCC started in 2003 compares, matches, and confirms the trades electronically1.

Consider a hypothetical example in which Company U enters a notional amount of 10 billion yen and Bank V enters 1 billion yen. The terms differ and do not match. An input error on either side can be found at the confirmation stage. With paper confirmations, a person on the receiving side compares the counterparty's confirmation with the firm's own record1. Matching has the system do this comparison.

The form in which only one side sends the terms and the other accepts them is called affirmation. The contents and procedures of the trade confirmation are covered on the confirmation page.

Notes

  1. GAO-07-716 (June 2007), the paragraph describing DTCC's automated confirmation system (Deriv/SERV) ("to electronically compare, match, and confirm credit derivative trades") and the paragraph describing the paper confirmation process (a confirmation is faxed, and the receiving side compares it with its own record by hand). OSTTRA, "Trade Processing", the "Confirm" item ("by matching or affirming counterparty trade submissions") gives the same position for matching as a way of confirming. ↩ ↩2