What needs to be done in the event that a trade is amended by one or both parties?

The ACI Model Code provides strict guidance on operations, settlement, and confirmation procedures to eliminate post-trade discrepancies and operational risk. In the event that a trade is amended by either or both counterparties after the initial agreement, the original confirmation becomes invalid. The Model Code mandates that a new, updated trade confirmation clearly indicating the amendment (or cancellation and re-booking) must be generated immediately. Consequently, the entire confirmation and matching cycle must restart from the beginning, requiring both parties to transmit, verify, and match the new confirmation details completely to ensure full mutual agreement across front-, middle-, and back-office systems before settlement occurs.

B. The confirmation cycle must restart to ensure full automated or manual matching and verification of the modified terms by both parties.

C. Generating a new confirmation is required whenever trade terms are modified; an unissued or unconfirmed amendment creates operational risk.

D. Verbal notification alone is insufficient; formal written or electronic trade confirmations must be issued and matched to execute amendments validly.

ACI Financial Markets Association, The ACI Model Code, Section: Back-Office Procedures – Confirmations and Amendments, p. 58-61.

Federal Reserve Bank of New York, Foreign Exchange Committee (FXC) Operations Best Practices, Section: Trade Confirmation & Amendments.