RE: FpML-BP minutes 2007-08-01

I believe the term ‘trade execution’ is commonly used to refer to the trading event between 2 front-office staff when the terms of the trade are first agreed. So trading platforms such as TradeWeb, Bloomberg, Market Axess etc. are often referred to as ‘execution platforms’. I don’t agee that execution refers to reaching a legal agreement on platforms such as DTCC or SwapsWire other than in the broader use of the word ‘execution’ to refer to signing any form of document. So DTCC and SwapsWire are generally referred to as ‘confirmation platforms’.

Guy

From: bpwg@xxxxxxxx [mailto:bpwg@xxxxxxxx] On Behalf Of Bill Hodgson
Sent: Monday, August 13, 2007 5:37 AM
To: bpwg@xxxxxxxx
Cc: bpwg@xxxxxxxx
Subject: Re: FpML-BP minutes 2007-08-01

IMHO:

Execution is a legal step, which is defined as the point at which the electronic records within a system become equivalent to and fully represent a binding contract between two parties. (in Deriv/SERV reaching the Matched status defines this point)

Affirmation and Confirmation are processes to reach an end-point where two parties (or three or four in the case of assignments) have indicated their agreement to an electronic record which is sufficient to achieve Execution of a contract (whether a new trade or post-trade event)

The Deriv/SERV platform supports Affirmation where one party can enter and communicate details of a contract to the other, where the 2nd party at a minimum responds with their own Trade Ref Id to achieve a Matched status, but can provide feedback by proposing alternative definitions for terms presented to them (e.g. different dates, rates, underlying) and the system enables both parties to communicate until a Match is reached.

The Deriv/SERV platform also supports matching, where both sides express their view of the terms of a contract and the system compares their electronic entries, both parties use the system and / or external communication to resolve the differences until a match is reached.

Regards, Bill
____________________________________________
Bill Hodgson, First Vice President
DTCC Deriv/SERV Business Development
Warehouse Value Added Services

Phone:    +44 (0) 207 650 1450
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____________________________________________

"Marc Gratacos" <mgratacos@xxxxxxxxx>
Sent by: bpwg@xxxxxxxx

02/08/07 14:44

Please respond to
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Subject	FpML-BP minutes 2007-08-01

BPWG

Participants
Marie-Paule Dumont (SWIFT)
Lucio Iida (BGI)
Pierre Lamy (GS)
Francoise Massin (SWIFT)
Banu Apers (SWIFT)
Brian Lynn (GEM)
Irina Yermakova (ISDA)
Marc Gratacos (ISDA), chair

Discussion
- Views for short-form confirmations

The idea is to use the views mechanism to separate the schema representation of short and long form confirmations. Different working groups apply different modelling approaches to the representation of short and long form confirmations. By applying the views mechanism, the result should be a simpler schema representation and with less optionality for both short and long form confirmations.

Even though there was agreement among participants that this is a very good idea. There were some issues that were pointed out:

The introduction of views for product representation adds a new dimension to the views. An analysis is required to see what product representations are applicable to what business process views. For example, is the brokerEquity representation applicable for confirmation or only for reporting processes?
The implementation of this change needs to be evaluated since it would require a change to the existing prototype (probably adding more namespaces) and changes to the examples.
There may be other approaches to make a clearer distinction between long and short form. This may involve an optional long form container for all elements specific to long form. However, this would cause that related elements are placed in different locations within the product representation.

The agreement was to get additional feedback from the Coordination Committee to see whether participants are interested in using views to distinguish between short and long form confirmations.

- Trade Execution
The relationship with trade affirmation and between trade affirmation and confirmation is not clear.

The participants in the meeting expressed that execution, affirmation, and confirmation could be three separate processes. According to BGI, the trade is executed, and then it gets validated in the affirmation process before it is sent to a confirmation provider or to other recipient.

Additional input from institutions is necessary in order to have a clear definition of the processes.

- Option Exercise/Expiry
It will be discussed it in the next meeting. Marc will circulate a proposal.
Please let me know if I missed any point. Thanks in advance.
We'll meet again in August 15.

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