FpML-BP option exercise - negotiation pattern?

["Marc Gratacos" <MGratacos@xxxxxxxx>]

In today’s call I’d like to discuss with the group whether is appropriate to apply a negotiation pattern (like the one defined by Steve Ross-Talbot in his affirmation proposal) for the option exercise event. ISDA published a best practice statement for option exercise http://www.isda.org/c_and_a/docs/BPDocOptionsExercise.doc

 

It is the responsibility of the Buyer of the Option Transaction to deliver an Exercise Advice but both parties may agree to exchange an Exercise Advice.  Where material economic terms have changed, it is recommended that the Seller sign and return, or exchange, an Exercise Advice.

The statement suggests that the receiver of the option exercise notification should send back a response agreeing with the exercise advice and signing it. What happens if the receiver disagrees? He/she will probably pick up the phone. This suggests to me that we could have messages for negotiation (modification, rejection,…). Or we could keep it simple with a simple request/response.

 

Best Regards,

-Marc

+13472846531

 

 

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