Comparison and Verification of Confirmations
Once a confirmation has been received, each party must compare and verify the confirmation. Sometimes a party will receive a confirmation for a transaction with terms and conditions it does not accept. It may even receive a confirmation for a transaction it does not recognize at all. The party who finds a discrepancy must promptly report it to the other party, and the erring party must send a corrected trade confirmation within one business day following a resolution. If the parties cannot resolve their differences, both should send a written notice of non-recognition (also called a “don’t know” or DK notice).
If a party doesn’t recognize a trade, it must promptly try to determine whether a trade occurred, and if the unrecognized trade confirmation was correct, it must immediately notify the confirming party by phone and send a written trade confirmation within one business day. If the party cannot confirm the trade, it must immediately notify the confirming party by phone and send a DK notice. The party receiving the DK notice should then check its records, and if it agrees with the other party, it should cancel the trade.
If a party sends a trade confirmation but fails to receive either a trade confirmation or a DK notice from the other party, the first party should determine whether a trade occurred. This determination should occur no earlier than T + 4 and no later than T + 8. If it believes that a trade occured it must immediately notify the other party by phone and send a failure to confirm within one business day. The other party should then try to determine whether a trade occurred, and if they find the transaction did occur, they should immediately phone the other party and send a confirmation within one business day. If they can’t find evidence that it occurred, they sh