SD-12.3 — Trade Confirmation & Matching

Business Domain: BD-12 Investment Operations & Servicing (Back office) · Applies: BOTH

Purpose

Confirms and matches the economic and operational details of a trade with the counterparty or broker, so both sides agree what was traded before it moves to settlement. A trade is executed on the desk; before the firm will settle it, it must be agreed — quantity, price, settlement date, instrument and settlement instructions reconciled against the counterparty’s record of the same trade. SD-12.3 is that agreement step. It exists as a distinct capability because an unconfirmed or mismatched trade settling is the most common cause of a settlement fail, and the matching step is operationally separate from both execution and settlement. It is not trade execution — that is SD-06.2 — and it is not settlement itself — that is SD-12.4; SD-12.3 sits between them, turning an executed trade into a settlement-ready, agreed one.

Service Operations

Trade affirmation — affirm the executed trade against the broker’s or counterparty’s terms on trade date, the first agreement that both sides booked the same trade.
Confirmation matching — match the firm’s trade record to the counterparty confirmation field by field — instrument, quantity, price, settlement date, settlement currency — and flag any mismatch.
Allegement resolution — investigate and resolve allegements: trades a counterparty asserts against the firm that the firm has no matching record of.
Mismatch and discrepancy management — work the queue of matched-with-difference and unmatched trades to resolution, escalating where the counterparty disputes a term.
Standing settlement instruction enrichment — attach the correct standing settlement instruction (SSI) to each confirmed trade, so the downstream settlement instruction carries the right account-and-place detail.
Central matching / CTM submission — submit and match trades through a central trade-matching utility where one is used, in place of bilateral confirmation exchange.
Confirmation status reporting — report the confirmation and matching status of the day’s trades, including the unmatched population that threatens the settlement cycle.

Inputs and outputs

Inputs: executed and allocated trades from SD-06.2 and SD-06.5 (E-05, PB-04, PB-05); broker and counterparty confirmations; standing settlement instructions; the security and entity masters for enrichment.
Outputs: confirmed, matched, settlement-ready trades — consumed by SD-12.4 Trade Settlement (which instructs settlement only on a matched trade); confirmation status — consumed by SD-12.10 Reconciliation, SD-14.1 Enterprise & Operational Risk Management, and the trading desk.

Entities

Consumes: E-05 Transaction (transaction_type = trade), PB-04 Execution, PB-05 Allocation; the SD-06.2 executed and allocated trades; the SD-06.5 executed and allocated trades.
Owns: none — confirmation and matching is a process state on a Transaction, not a master entity in its own right. The matched / unmatched / affirmed status is an attribute of the trade as it moves through the lifecycle, held as Transaction status; whether the standing settlement instruction (SSI) should be a reference entity is flagged on PB-06.
Open question: the SSI as a managed reference entity rather than an inline reference — relevant here (enrichment) and on SD-12.4 (settlement).

Standards

ISO 20022 and the legacy ISO 15022 — the messaging standards trade confirmations are exchanged on; the ISO 15022 MT515 / MT517 confirmation messages and their ISO 20022 successors.
SWIFT — the network most bilateral confirmation messaging runs over.
Central trade-matching utilities (e.g. an institutional central-matching service) provide the matching infrastructure many firms use in place of bilateral exchange; T+1 settlement cycles compress the window in which matching must complete.

Open extensions

The Service-Operation-level input/output contracts.
The standing settlement instruction (SSI) as a reference entity.
The matching-tolerance sub-model — which field-level differences are auto-resolved and which require investigation.