416. The two alternatives in this sub-section should be read also in conjuction with the guidance provided in section 8.2.4.

417. Alternative 1: Agreement is reached between the counterparties. There are three way to do so:

a. Using market convention. In this case, ESMA underlines that it suits well for standard currencies but reconciliation issues could arise for more exotic ones with not so well defined market convention.

b. Using alphabetical order. In this case, there should be no issue for the reconciliation process because the rule is clear, objective and simple to implement, but the reporting could sometimes differ from what was initially intent for the trade (i.e: reporting of EUR/AUD would be reported with AUD as the direction of leg 1 and EUR as the direction of leg 2, but it is not the market convention and it could be reported in a different way than the initial trade intent).

c. Using full agreement between counterparties. Even if this solution seems the best to reflect initial intent of the trade, there might arise issues on implementation process because it implies that counterparties agree in a very short period of time.

418. Alternative 2: Counterparties may not reach an agreement and the subsequent data reconciliation issues should be solved by the TR issue. In this case, what is the best way to proceed?

a. TR reconciliation should be only on currencies irrespective of leg 1 or leg 2.