Module 2 · Chapter 6

Trade Date: the Confirmations, Line by Line

A trade binds the moment its terms are agreed on the telephone. The written Confirmation follows, and you check it against the loan before the short window to object closes.

≈ 12 min read 8-question test

In this chapter

  • When a trade becomes binding, and what its Confirmation is for
  • How to check a Confirmation against the loan it hedges
  • Why a new trade shows a small loss on its first day

6.1Trade date in one paragraph

Atlas agrees its swap and its cap with the bank on a recorded telephone call. Each trade binds both sides from the moment the terms are agreed. The written record, called the Confirmation, arrives the next day.

You check it against your note of the call and against the loan it hedges. Atlas has two business days to object to any error.

Key point

A Confirmation records a trade. It does not make one. An error in it never undoes the trade. But if nobody objects in time, the paper stands as the agreed record, errors and all.

Also in this chapter

  1. How a telephone call creates the trade
  2. The dates and the calendar in Confirmation 1
  3. The two errors in the draft
  4. Six checks against the loan
  5. Confirmation 2: the cap is checked against the policy
  6. Why the trade shows a loss on day one
  7. Your job

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