Banking Terms - Set 22 (Deal Blotter, Pre-Authorization, No Dealing Desk, Deal Slip)

Deal Slip

A record of the essential details of a transaction entered into by a forex dealer. It is the primary source of record-keeping for a dealer. Deal slips are generally required to be archived for a certain number of years stipulated by the regulatory authority where the deal is recorded. Also known as deal ticket.

A deal slip is generally time-stamped to record the date and time of the transaction. It contains all of the information pertinent to a transaction, including but not limited to the amount of the transaction, whether it was a purchase or sale, the counterparty to the transaction, settlement date, transfer price, customer price and so on.

Deal Blotter

A trader's record of all the transactions executed on a given day. The deal blotter contains basic information pertinent to a transaction, with additional information included on the deal slip. The deal blotter for a forex trader would include both opening and closing currency positions initiated by the trader.

In a forex trading firm with several traders, the sum of the positions on all the traders' deal blotters at the end of the trading day will indicate the change in the firm's net position at close. While deal blotters were paper-based before the advent of computerization, they are now increasingly computer-based, enabling traders to analyze and monitor their currency trades more rapidly and efficiently.

Pre-Authorization

Pre-authorization is a banking term describing a practice where money is not taken from the payee’s account at the moment the transaction is made. The amount charged is instead made unavailable on that customers’ account – this is also known as authorization hold. Pre-authorisation is normally valid for 1- 5 days on debit cards, while credit card pre-auth periods can be longer and vary between issuers. This pre-auth period is usually used by retailers to make additional security checks on the card and the cardholder, to make sure that the transaction is not fraudulent. It also allows them time to make sure that the item being sold is in stock and ready to be shipped. Consumers near their credit or debit limits need to watch their available balances carefully, or the hold amount could push them over the limit, triggering a fee. Holds, also called blocks, are usually released within minutes or hours, but can sometimes last days.

No Dealing Desk

A way of forex trading that provides immediate access to the interbank market. The interbank market is where foreign currencies are traded. This is different than trading through the dealing desks that are found in many banks and financial institutions. By using a dealing desk, a forex broker who is registered as a Futures Commission Merchant (FCM) and Retail Foreign Exchange Dealer (RFED) can offset trades. If a no dealing desk system is used, positions are automatically offset and then transmitted directly to the interbank.

Forex brokers who use this system work directly with market liquidity providers. When trading through a no dealing desk, instead of dealing with one liquidity provider, an investor is dealing with numerous providers in order to get the most competitive bid and ask prices. An investor using this method has access to instantly executable rates.