When cancelling a previously sent message (field 22A is CANC) using MT 340:
field 21 must contain the reference, ie, the content of field 20, of the message containing the instruction to be cancelled
the cancellation message must contain at least the mandatory fields of the original message.
To amend a previously sent message (field 22A is AMND):
field 21 must contain the reference, ie, the content of field 20, of the message containing the instruction to be amended
the amendment message must contain both the unchanged and the changed/new fields of the original message
the amendment message replaces the original message.
The MT 340 is used to confirm a deal between two parties, A and B:
It can also be exchanged on behalf of an institution or corporate:
The MT 340 can also be used as a unilateral confirmation from a money broker to the parties A and B:
Or, when two money brokers are involved, between the money brokers:
Party A and party B are the legal entities which have agreed to the transaction. Party A is either:
the Sender
the institution/corporate on whose behalf the message is sent
one of the institutions for which the broker arranged the deal and to whom he is sending the confirmation
or, when a money broker confirms to another money broker, the party for which the sending broker arranged the deal.
Party B is either:
the Receiver
the institution/corporate on whose behalf the message is received
the other institutions for which the broker arranged the deal, ie, party A's counterparty
when a money broker confirms to another money broker, party A's counterparty.
Industry Requirements
The following guidelines apply when sending/exchanging an MT 340:
When ISDA is mentioned in field 77H (Type), this confirmation constitutes a Confirmation as referred to in, and supplements, forms a part of and is subject to, the ISDA Master Agreement or the Interest Rate and Currency Exchange Agreement dated as of (see field 77H) between Party A and Party B as amended and supplemented from time to time ('Agreement'). All provisions contained in the Agreement govern this Confirmation except as expressly modified below.
For the purpose of this document 'ISDA Master' shall mean either the ISDA Master Agreement or the Interest Rate and Currency Exchange Agreement, or vice-versa.
If Party A and Party B are not parties to an Agreement, this Confirmation evidences a complete binding agreement between Party A and Party B as to the terms of the Transaction to which this Confirmation relates. Party A and Party B agree to use all reasonable efforts promptly to negotiate, execute and deliver an agreement in the form of the 1992 ISDA Master Agreement (Multicurrency-Cross Border) (the 'ISDA Form'), with such modifications as Party A and Party B will in good faith agree. Upon the execution by Party A and Party B of such an agreement, this Confirmation will supplement, form part of, and be subject to that agreement. All provisions contained or incorporated by reference in that agreement upon its execution will govern this Confirmation except as expressly modified below. Until we execute and deliver that agreement, this Confirmation, together with all other documents referring to the ISDA Form (each a 'Confirmation') confirming transactions (each a 'Transaction') entered into between Party A and Party B (notwithstanding anything to the contrary in a Confirmation), shall supplement, form part of, and be subject to an agreement in the form of the ISDA Form as if Party A and Party B had executed an agreement in such form (but without any Schedule thereto except for the election of New-York Law as the governing law and USD as the Termination Currency or the Termination Currency is the currency of the Transaction) on the Trade Date of the first such Transaction between the parties. In the event of any inconsistency between the provisions of that agreement and this Confirmation, this Confirmation will prevail for the purpose of this Transaction.
When AFB is mentioned in field 77H (Type), this Confirmation constitutes a Confirmation as referred to in, and supplements, forms a part of and is subject to, the AFB Master Agreement for foreign exchange and derivatives transactions dated (see field 77H) between Party A and Party B as amended and supplemented from time to time ('Agreement'). All provisions contained in the Agreement govern this Confirmation except as expressly modified below.
If field 77H specifies DERV as the type of master agreement and if Party A and Party B are parties to a Deutscher Rahmenvertrag für Finanztermingeschäfte (the "German Master Agreement"), this Transaction is subject to the terms and conditions of that German Master Agreement.
If Party A and Party B have mutually agreed to enter into this German Master Agreement, but the Agreement itself has not yet been signed, the terms and conditions of the Deutscher Rahmenvertrag für Finanztermingeschäfte (the "German Master Agreement") and its annexes, the "Anhang für Devisengeschäfte und Optionen auf Devisengeschäfte" or the "Anhang für Optionsgeschäfte auf Börsenindizes und auf Wertpapiere zu dem Rahmenvertrag für Finanztermingeschäfte", as applicable, will apply.
The individual transaction (Einzelabschluß) and all other transactions (Einzelabschlüsse) between Party A and Party B form a single agreement.
If some of the standard definitions linked to the agreement specified in field 77H do not apply to the confirmation of a trade under that agreement, a long form confirmation should be sent as there isn't an appropriate SWIFT message for it.
If a collateral agreement exists between two confirming parties, then the FRA is considered subject to that agreement.
The Reset Date Specification for all FRA's confirmed with the MT 340 is FIRST, ie, the first day of the Calculation Period.
The Reset Date is equal to the Payment Date.
Modified Following Business Day Convention means: the non-business date will be adjusted to the first following day that is a business day unless that day falls in the next calendar month, in which case that date will be the first preceding business day.
For all FRA's confirmed with the MT 340, the Effective Date is equal to the Payment Date if ISDA is specified in field 77H or the Settlement Date if FRABBA is specified in 77H; provided however that if the Effective Date is a non-business day it will remain unadjusted, however, the Payment Date /Settlement Date shall be adjusted in accordance with Modified Following Business Day Convention.
The message only handles the contract part of the Forward Rate Agreement. It is not used for confirming settlement details following the establishment of the settlement rate on fixing date. This information is confirmed using an MT 341.
For the actual transfer of funds or the confirmation of credits and debits, other messages outside Category 3 are available such as the MTs 202, 203, 205, Financial Institution Transfer messages and the MTs 900, 910, 950, Confirmation of Debit/Credit and statement messages, respectively.
In all cases, the common reference of the MT 340 must be quoted in the relevant reference field, ie, field 21 of the MTs 202, 203, 205.
If the underlying contract is amended/cancelled on a bilateral basis, this should be agreed upon by a bilateral exchange of confirmations with either code AMND or CANC, respectively.
The cancellation function is only used to cancel an erroneous message, not to terminate the FRA.
