Deal Slip

What Is a Deal Slip?

A deal slip is a record of the details of foreign exchange (FX) transactions and is the primary way for forex brokers to maintain accurate records. Depending on the regulations in the jurisdiction of record, retention of each deal slip must be kept for a specific period of time.

While used in foreign currency trading, this type of record-keeping also applies to trade activity in other financial markets including stocks, bonds, and options markets. Deal slips are known as deal tickets in futures and other derivatives markets.

Key Takeaways

  • Deal slips provide detailed information about forex transactions to provide an official record and audit trail of trades.
  • Once filled out on paper tickets, most deal slips are recorded and maintained in electronic format.
  • Filling out deal slips improperly to record fake trades or alter true trading information is illegal and has led to several trading scandals.

Understanding Deal Slips

Deal slips essentially function as receipts for forex trades, providing time-stamped proof of a transaction execution at a specific price. Each deal slip bears a unique serial number and includes information such as the currency pair traded, date, time of the transaction, amount of the trade, the transaction type including long or short, and the settlement date. Also, the deal slip identifies the counterparties and broker involved in the trade.

Deal slips have been used long before electronic trading became common and many trading firms now record and store this information in a digital format. Nevertheless, some deal slips are still printed on paper and stored physically.

How Deal Slips Are Used

Once a trade has been executed, the deal slip provides a record that helps in maintaining internal accounting reports, classifying trades for auditing and tax purposes, and categorizing transactions for analysis of trading patterns. After representatives from a firm’s trading desk complete the deal slip, it is usually forwarded to the organization’s back office so that the trade can be confirmed with counterparties and then settled by the settlement date.

Deal slips are an essential control for minimizing errors and auditing a firm’s records. They give all parties more confidence that markets are functioning properly.

How Deal Slips Are Misused

The misuse of deal slips can even reveal fraudulent activity. For example, in 2009 The Wall Street Journal reported that disgraced investment advisor Bernie Madoff asked assistants to generate falsified trading tickets. Researching past prices for specific securities, these assistants used that data to create documents for trades that had never been executed but aligned with Madoff’s claims for his steady annual returns.

In another case, British securities broker Jonathan Bunn received a lifetime ban by the country’s Financial Services Authority (FSA) in 2010 for fraudulent trading. The losses cost his firm, Lewis Charles Securities, more than 2.6 million British pounds. Investigators discovered that Bunn had falsified deal slips which resulted in his firm holding an unmatched short position of more than 6.9 million shares of HSBC Holdings, leaving the firm vulnerable to high losses.

Article Sources
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  1. Wall Street Journal. "Top Broker Accused of $50 Billion Fraud." Accessed Nov. 27. 2020.

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