581. TRs should reconcile derivatives with two legs by reconciling each of the legs as reported by the counterparties. It is worth noting that in the case of most types of derivatives with two legs such as interest-rate swaps, cross-currency swaps and FX swaps, the order of the legs cannot be unequivocally defined, as there is no specific prevalence of one leg over the other.

582. Alternative A: Counterparties should agree on the reporting of the respective legs of the derivative. When counterparties report inconsistently the two legs of the derivative, the TR might not succeed in matching the details of the derivative. This will put the burden on the counterparties as it would require them for the successful reconciliation to agree on a sequence for the reporting of the different legs. This will be consistent with the current framework.

583. Alternative B: When counterparties report inconsistently the two legs of the derivative, the TR should intend matching the two legs irrespective of the sequence, taking into account the values reported by the two counterparties under field "direction of leg 1" by matching the legs with opposite values. In case Counterparty 1 has reported it with "payer" the TR should reconcile it with the leg that is identified as "receiver" or is the leg that is not identified, when leg one is identified with "payer" This would move the burden to the TRs, but it would also limit the existence of reconciliation breaks, as well as it would facilitate their resolution.

Q95. Which alternative do you prefer? What are the costs for your organisation of each alternative? Please elaborate on the reasons for your response.