Electronic Trading & Settlement practices.

A view from The Foreign Exchange Committee on the issues facing market participants who replace confirmation messaging with trade validation from electronic front end trading systems.

First Published: e-Forex Magazine 8 / Features / October, 2002

The Foreign Exchange Committee is currently in the process of updating their flagship FX operations document, "Managing Operational Risk in Foreign Exchange". Many operational issues related to eFX are expected to be addressed in the new edition, which will be released in early 2003 and available on the FXC’s website: www.newyorkfed.org/fxc. In the meantime however, with regard to the impact of eTrading and confirmation messaging, the FXC recently published a paper on the topic, which we have summarised below:Electronic front-end trading systems are changing the way in which counterparties validate or confirm trades with one another. For example, industry best practices recommend that counterparties confirm each trade with one another via confirmation messages (ie. SWIFT MT300, fax, paper, or phone confirms). However, some counterparties have chosen, on a bilateral basis, to eliminate confirmation messages with one another in lieu of electronic affirmation facilities offered by electronic trading...continued

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