3.2.5.20 Guide for completing Confirmations for A$ FRAs

This part contains commentary on:

  • "Confirmation methods";
  • "Austraclear confirmation";
  • "Letter confirmation"; and
  • "Settlement Date confirmation".

Also see 3.1.2 "Long form confirmation".

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Confirmation methods

The following methods can be used to confirm. It is up to the parties to agree which method or methods they will use:

  • Austraclear
  • Telephone
  • Telex
  • Letter
  • Swift MT340 message
  • Reuters direct dealing system
  • Telerate trading service
  • Facsimile

Following is recommended wording for Austraclear and letters. However this wording and all confirmation procedures must be completed in accordance with market conventions.

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Austraclear

  • FRAs between full members of Austraclear should be confirmed through Austraclear unless otherwise agreed at the time of dealing.
  • Information to be entered

    When a party confirms an AUD FRA by specification in the Austraclear Menu, the Austraclear terms correspond to certain terms used in the 2006 ISDA Definitions as follows:

2006 ISDA Definitions

Austraclear terms

AUD-BBR-BBSW

"Y" at the "Use BBSW (Y/N)" item.

Fixed Rate Payer

"B" at the "side of the trade" item.

Calculation Amount

Amount

Fixed Rate

Rate

Trade Date

Deal Date

Floating Rate Payer

"L" at the "side of the trade" item

Termination Date

Maturity Date

Payment Date

Settlement Date

FRA Amount (as amended by Part 5(#) of this Agreement)

Cash Element (being the difference between the Settlement Value and the Specified Value).

  • The A$ FRA is given a number when this information is entered. It will be listed in Austraclear as "Confirmed" once both parties have entered details and all details match.

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Letter

Care!  This letter uses terminology contained in an Australian Addendum no longer recommended for use.

  • Normally this form of confirmation would not be used if both parties are full members of Austraclear.

Suggested form of letter:

 

 [Letterhead of Party A]

 [Date]

 

[Name and Address of Party B]

Dear

Forward Rate Agreement

The purpose of this letter is to confirm the terms and conditions of a forward rate agreement entered into between us on the Deal Date specified below.

Our reference:

Deal Date:

Contract Amount:

Settlement Date:

Maturity Date:

Settlement Period (days):

Contract Rate:

Borrower:

Lender:

Please confirm that this letter correctly sets out the terms of our agreement by executing the copy of this Confirmation enclosed for that purpose and returning it to us.

 Yours sincerely

 [name of party preparing Confirmation]

By:

Name:

Title:

 

Confirmed as of the date first written:

[name of other party]

By: 

Name:

Title:

 

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Settlement Date confirmation

Some parties may choose on the Settlement Date to confirm the Interest Settlement Rate and Settlement Sum either by Austraclear or letter. If this procedure is to be adopted, the parties should agree which party or parties are to issue such a confirmation on the Settlement Date.  A suggested form of letter confirmation follows. It should be appropriately amended if other forms of confirmation are used.

 

 

 [Letterhead of Party A]

 [Date]

[Name and Address of Party B]

Dear

Settlement Date confirmation

The purpose of this letter is to confirm the Interest Settlement Rate and Settlement Sum for the following forward rate agreement.

FRA Reference Number: Borrower:

Lender:

Deal Date:

Contract Amount:

Settlement Date:

Maturity Date:

Settlement Period (days):

Contract Rate:

Borrower:

Lender:

Interest Settlement Rate:

Settlement Sum:

 Yours sincerely

 [name of party preparing Confirmation]

By:

Name:

Title:

 

 


Last Update Date 29 Jun 2011