To cover securities transactions, fund managers may need to buy and sell currencies. The term 'fund managers' includes investment managers, investment advisors, advisors and managers.
The fund manager arranges these deals either with an independent (third party) forex institution, the executing broker, or with the treasury department of his custodian.
The fund manager often 'groups' trades needed to cover or hedge securities for several funds. This means that the purchasing and selling needs of currencies are added together and executed as one single trade.
After the trade has been agreed, it is allocated to the different funds using the MT 303. So, after the global deal has been agreed, the fund manager sends an MT 303 to the executing broker. The broker will answer by sending one MT 300 per allocation.
The MT 303 is an allocation message sent by the fund manager. Each allocation is for a different fund, ie, a different beneficiary. It is a unilateral message.
Information Flow
The fund manager and the executing broker should agree up-front if they will exchange an MT 300 to confirm the block trade or if sending the MT 303 with the individual MTs 300 as answers is sufficient.
Settlement Details
The table below shows how the different settlement parties involved in the deal can be identified.
Party A is the fund manager and party B is the executing broker.
Whenever possible, users should use option A or J to identify institutions in these fields. Use of free text, ie, option D, except when used to specify recognized code words, is strongly discouraged. Option D not only precludes party B from matching and further processing the message automatically but also is contrary to the message text standards which state that option D is only to be used when no other option is available.
Normally, the beneficiary is party A for the amount bought and party B for the amount sold. If party A or party B forwards the funds to an ultimate beneficiary institution, this institution is included in field 58a of the amount sold.
Party A services account of party B. No separate settlement messages are sent.
 Party A will RECEIVE funds from Party B |
Party A will PAY funds to Party B |
|---|---|
| Party A will debit party B's account |
Party A will credit party B's account |
| :53a: not used |
:53a: not used |
| :56a: not used |
:56a: not used |
| :57a:[/account no of party B]party A |
:57a:[/account no of party B]party A |
Party B services account of party A. No separate settlement messages are sent.
| Party A will RECEIVE funds from Party B |
Party A will PAY funds to Party B |
|---|---|
| Party B will credit party A's account |
Party B will debit party A's account |
| :53a: not used |
:53a: not used |
| :56a: not used |
:56a: not used |
| :57a:[/account no of party A]party B |
57a:[/account no of party A]party B |
Beneficiary's account serviced by a financial institution other than party A or party B.
The payer sends an MT 202 to its correspondent who will then send an MT 205 or equivalent to the correspondent of the payee.
The correspondent can be a branch of the party.
| Party A will RECEIVE funds from Party B |
Party A will PAY funds to Party B |
|---|---|
| Credit to party A's account with that financial institution |
Credit to party B's account with that financial institution |
| [:53a:Correspondent of party B] |
[:53a:Correspondent of party A] |
| :56a: not used |
:56a: not used |
| :57a:[/account no of party A]correspondent of party A |
:57a:[/account no of party B]correspondent of party B |
Beneficiary receives the funds through another institution (eg, BANK x for party x).
The payer sends an MT 202 to its correspondent. The correspondent will then send an MT 205 or equivalent to the correspondent of BANK x, ie, CORR x. CORR x will then send an MT 202 to BANK x who will then send an MT 950 to party x.
Field 56a identifies where BANK x will receive the funds.
| Party A will RECEIVE funds from Party B |
Party A will PAY funds to Party B |
|---|---|
| BANK A will receive the funds for party A |
BANK B will receive the funds for party B |
| [:53a:Correspondent of party B] |
[:53a:Correspondent of party A] |
| :56a:[/account no of BANK A]CORR A |
:56a:[/account no of BANK B]CORR B |
| :57a:[/account no of party A]BANK A |
:57a:[/account no of party B]BANK B |
Beneficiary to receive the funds directly through a clearing system.
The payer sends an MT 202 to its correspondent who will then send an MT 202 the payee.
| Party A will RECEIVE funds from Party B |
Party A will PAY funds to Party B |
|---|---|
| Party A will receive the funds through clearing |
Party B will receive the funds through clearing |
| [:53a:Correspondent of party B] |
[:53a:Correspondent of party A] |
| :56a: not used |
:56a: not used |
| :57a:/CLEARparty A |
:57a:/CLEARparty B |
The counterparties use their standing settlement instructions.
| Party A will RECEIVE funds from Party B |
Party A will PAY funds to Party B |
|---|---|
| :53a: not used |
:53a: not used |
| :56a: not used |
:56a: not used |
| :57D:SSI |
:57D:SSI |
The payment flows are netted based on a bilateral agreement.
| Party A will RECEIVE funds from Party B |
Party A will PAY funds to Party B |
|---|---|
| :53a: not used |
:53a: not used |
| :56a: not used |
:56a: not used |
| :57D:NET |
:57D:NET |
There is no payment (amount is zero) or the settlement details are irrelevant.
| Party A will RECEIVE funds from Party B |
Party A will PAY funds to Party B |
|---|---|
| :53a: not used |
:53a: not used |
| :56a: not used |
:56a: not used |
| :57D:NONE |
:57D:NONE |
The settlement details are not known at the time the confirmation is issued.
| Party A will RECEIVE funds from Party B |
Party A will PAY funds to Party B |
|---|---|
| :53a: not used |
:53a: not used |
| :56a: not used |
:56a: not used |
| :57D:UNKNOWN |
:57D:UNKNOWN |
| Note: |
It is only necessary to quote an account number when multiple accounts are serviced for the same institution. |
