Volume 2 — Governance and ControlsGovernance and Controls © Copyright 2002, All rights reserved 29 • The confirmation template should be approved by the legal department. • The confirmation group should review the confirmation to verify compliance with the delegation of authority and should fax or e-mail a confirmation to the counterparty within two business days of the trade date or by a time specified in the contract. • Once sent, the deal should be locked in to the system and should not be modified without the proper approval. • After the confirmation has been sent, the status of the confirmation should be updated in the system in order to monitor exceptions and ensure completion. • The confirmation group should review a list of outstanding confirmations daily and should follow up on each with the relevant counterparty. • If a disputed confirmation is received from the counterparty, the confirmation group should notify both front-office management and the counterparty within 24 hours of receipt, so that all parties are aware of the discrepancy and the appropriate personnel can reconcile the issue. • The confirmation should be retained for reporting requirements or per the company’s document retention policy. Key Reports • Confirmation. • List of outstanding confirmations. 1.2.3 Contract Management Process Overview Before executing a transaction with a new counterparty, the dealmakers or the credit department should ask contract administration to set up a new counterparty in the system and develop a legally binding contract. To develop a contract, the contract administration group and legal department work together with the counterparty to reach consensus on language and provisions by which both parties can abide. Once an agreement is reached, the contracts are signed and captured in the system they are continually monitored to ensure that their provisions are met. Although it is best practice to have a contract in place before executing transactions with a counterparty, it is not always practical to satisfy this requirement. If a contract is not complete, a long-form confirmation should be used to provide the company some legal recourse. A long- form confirmation is a summary of the deal terms with additional legal provisions that would normally be included in a contract. Objectives • Ensure that valid enabling agreements and contracts are in place before the company commits to deals. • Ensure that the terms of the contract are met throughout its life.