Volume 2 — Governance and ControlsGovernance and Controls © Copyright 2002, All rights reserved 30 Best Practices and Controls • Contract administration should contact the counterparty to obtain company information and enter that information into the common company system. Contract management should be responsible for processing all contracts and coordinating negotiations with the dealmaker and the credit and legal departments. • All systems should be linked to the common system to ensure that proper names, addresses, etc., are used consistently by all business units. • Any changes to the counterparty’s name, address, etc., should be entered into the system only by the contract administration department. • Approved counterparties should be communicated to involved clearinghouses and banks. • Each new contract should be assigned an owner the status of the contract should be maintained in a tracking system. • For enabling agreements, industry-standard master agreements (ISDAs, GISBs, etc.) should be used when possible. For other contracts, the company should use its general terms and conditions or long-form confirmation as approved by the legal department. • Net-out, set-off, and margining provisions should be detailed in the contract. • Any significant change to the contract should be communicated to all appropriate parties. • Once completed, the contract should be routed through an approval process based on level of authorization. Contract management should facilitate the approval process and ensure that all signatures are obtained and filed. • Contracts should require the signature of both counterparties to be legally executed. • Once executed, the original contract should be stored offsite in a locked, fireproof environment. • To effectively monitor the contracts, contract determinants should be written and stored in a database for quick reference and sorting. • A contract number should be linked to each deal in the trading system this allows cross- referencing of deals with their respective contracts. • Contract management should sort and screen contracts to identify those that may be close to expiration or be approaching other contract limits if one is found, personnel should notify the front office. • Each quarter, contract management should verify that all deals in the trading system have valid counterparties and contracts. • Each year, contract management should update the status of all counterparties and contracts that are no longer active in the system.