Counterparties shall record, observe and mitigate operating risks and counterparty risks associated with derivatives transactions in accordance with Article 107 paragraph 1. In particular, they must:
- confirm the contractual terms of derivatives transactions in a timely manner;
- have procedures for reconciling portfolios and managing the associated risks, except for when the counterparty is a small non-financial counterparty;
- have procedures for identifying and resolving disputes between parties at an early stage;
- regularly, but at least twice per year, perform portfolio compression where this is appropriate to mitigate their counterparty risk and provided they have 500 or more non-centrally cleared OTC derivatives transactions outstanding.