How Does a ‘Master Confirmation’ Agreement Help Reduce Operational Settlement Risk?
A Master Confirmation standardizes the commercial terms for a series of similar derivatives trades executed under a single Master Agreement (like ISDA). By pre-agreeing on standardized terms, it reduces the need for lengthy, individual confirmations for every trade.
This minimizes the risk of errors, misinterpretations, and delays in the post-trade processing and settlement phase, thus lowering operational settlement risk.
Glossar
Master Agreement
Framework ⎊ A Master Agreement, within cryptocurrency, options trading, and financial derivatives, establishes a standardized set of terms governing future transactions between parties, reducing negotiation costs and legal risks associated with each individual trade.
Confirmation
Attestation ⎊ The term "confirmation" within cryptocurrency, options trading, and financial derivatives signifies a process validating a transaction or event, establishing its legitimacy and finality.
Agreement
Context ⎊ Agreement, within cryptocurrency, options trading, and financial derivatives, signifies a legally binding or consensually established understanding defining obligations, rights, and responsibilities between parties involved in a transaction or contract.