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Oracle Treasury User Guide
Release 12.1
Part Number E13426-04
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Foreign Exchange Deals

This chapter covers the following topics:

Foreign Exchange

This section explains how to enter foreign exchange deals, including spot and forward deals. It also describes how to roll over or predeliver your foreign exchange deals.

You must authorize the individual currencies, and then authorize the specific currency combinations that you want to exchange before you can enter a foreign exchange deal. For more information see: Currency Details.

Spot and Forwards

Use the Foreign Exchange Spots/Forwards window to enter spot trades or your forward foreign exchange deals. You can enter several different types of spot or forward deals:

You can also use the Quick Deals window to quickly enter several spot and forward deals at the same time. See: Quick Deals.

Entering Standard Spot or Forward Deals

Create standard spot or forward deals to track foreign currency deals between your company and a counterparty.

To create a standard spot or forward deal

  1. Navigate to the Foreign Exchange Spot/Forwards window.

  2. In the Dealer field, choose the foreign exchange dealer.

  3. In the Company field, choose the company for the deal.

  4. In the Counterparty field, choose the other party for the deal.

    If you want to create a contra company deal, choose a company from the list of values.

    If you want to create a standard spot or forward deal or a swap deal, choose a counterparty from the list of values.

  5. If you are making the deal on behalf of a client, in the Client field, choose the client.

  6. In the Portfolio field, choose a portfolio for the deal.

  7. In the Limit field, choose a limit that you want to apply to the deal.

  8. In the [ ] field, enter the descriptive flexfield information as required. For information on descriptive flexfields, see: Oracle E-Business Suite Flexfields Guide.

  9. In the Deal Subtype and Product Type fields of the Main Details tabbed region, select a deal subtype and product type for the deal.

  10. In the Value Date field, enter the date on which the exchange of currencies is to take place.

  11. In the Buy Currency field, choose the currency being bought. In the Buy Amount field, enter the amount of currency being bought.

  12. In the Sell Currency field, choose the currency being sold. In the Sell Amount field, enter the amount of currency being sold.

  13. The current system rate for the currency pair entered in the Buy Currency field and Sell Currency field defaults into the Reference Spot Rate field. You can override this rate.

  14. If you are entering a forward deal, in the Forward Points field, enter the forward points for the deal. Forward points are the premium or discount from the current spot exchange rate and are calculated based on the difference between the reference spot rate and transaction rate.

  15. In the Transaction Rate field, enter the spot or forward rate for the deal.

    Note: If you enter any two values for the calculation (reference spot rate, forward points, or transaction rate), the system calculates the third rate.

  16. In the Additional Details tabbed region complete the following fields as required.

  17. For information about other foreign exchange or money market deals that are related to your foreign exchange spot or forward deal, see the Related Deals tabbed region.

  18. If you used a broker for your foreign exchange spot or forward deal, complete the fields in the Brokerage tabbed region.

  19. Save your work.

  20. To view a list of your foreign exchange quick input deals, choose the Review Quick Inputs button. For more information on foreign exchange spot or forward deals using the Quick Deals window, see: Quick Deals.

Entering Spot or Forward Swap Deals

Use the Swap Deal window to enter foreign exchange swap deals.

When you swap your spot or forward deals, you enter the first leg of the deal completely using the steps described in Entering Standard Spot or Forward Deals (see: Entering Standard Spot or Forward Deals).

After you enter the first leg of the deal, but before you save the deal, choose the Create Swap button to enter the second leg of the deal. Some information for the second leg of the deal is automatically populated based on the deal information you entered previously. Use the Swap Deal window to edit the details for the second leg of the deal as needed.

To enter a spot or forward swap

  1. Enter the first leg of the swap deal using the steps described in Entering Standard Spot or Forward Deals. See: Entering Standard Spot or Forward Deals.

  2. To create the second leg of the swap deal, choose the Create Swap button. The Swap Deal window appears. The following fields are automatically populated based on the information entered for the first leg of the deal: Deal Subtype, Value Date, Buy, Buy or Sell Amount, Sell, Buy Acct Num, Sell Acct Num, Reference Spot Rate, Counterparty Account, and Pricing Model.

  3. In the Facility Limit field, select a limit for the deal.

  4. In the Sell or Buy Amount field, enter the amount of currency sold or bought or enter the rate to automatically calculate the missing amount.

  5. If the second leg of the swap is of subtype Forward, enter the forward points for the swap in the Forward Points field.

  6. In the Transaction Rate field, enter the rate for the second leg of the swap deal.

    Note: If you enter any two values for the calculation (reference spot rate, forward points, or transaction rate), the system calculates the third rate.

  7. In the Internal Comments field, enter comments about the deal as needed.

  8. Choose the Done button to close the Swap Deal window.

  9. Save your work.

Entering Spot or Forward Contra Company Deals

Use the Contra Company Deal window to enter into a spot or forward deal with another company. When a Contra Company Deal is created, both companies involved in the transaction will be able to post this deal in their respective ledgers.

To enter a spot or forward contra company deal

  1. Enter the deal details using the steps described in Entering Standard Spot or Forward Deals. See: Entering Standard Spot or Forward Deals.

  2. To enter the contra company details for the deal by choosing the Create Contra Company button. The Contra Company Deal window appears. The following fields are automatically populated based on the information previously entered: Dealer, Buy Currency, Sell Currency, Buy Account, Sell Account, and Pricing Model.

  3. In the Portfolio field, choose a portfolio for the deal.

  4. In the Sell Acct Num field, choose the contra company account from which you are selling currency.

  5. In the Facility Limit field, choose a limit for the deal.

  6. In the Comments field, enter comments about the deal as needed.

  7. Choose the Done button to save your work.

Entering Spot or Forward Subsidiary Deals

Use the Multiple Subsidiary Deals window to enter multiple spot or forward deals between your company and its subsidiaries when you conduct an open market transaction on behalf of your subsidiaries.

To enter multiple spot or forward subsidiary deals

  1. Enter the deal details using the steps described in Entering Standard Spot or Forward Deals. See: Entering Standard Spot or Forward Deals.

  2. To create multiple subsidiary deals, choose the Create Subsidiary button. The Multiple Subsidiary Deals window appears.

  3. In the Party field of a blank row, select the subsidiary with whom you are entering into the deal. The default buy and sell currencies for that subsidiary automatically appear in the Buy and Sell fields.

  4. In the Buy Amount or the Sell Amount fields, enter either the buy amount or the sell amount for the deal.

  5. Enter the rate for the deal. The amount that you did not enter earlier is automatically calculated and populated in the appropriate Amount field.

  6. In the Limit field, choose a limit for the deal.

  7. Repeat steps 3 through 6 for each deal you want to enter.

  8. Choose the Done button to save the deals.

Importing Spot or Forward Deals

If you need to enter spot or forward deals frequently and the deal details are available in an electronic source such as a bank file or a third party application, you can use the XTR_DEALS_INTERFACE table and the Deal Interface Summary window to import the deal details into Treasury. For more information, see: Importing Deals into Treasury.

Viewing Spot or Forward Deal Details

Use the View Spots/Forwards window to view the details for a single spot or forward deal.

To view details of a spot or forward deal

  1. In the View Foreign Exchange Spot/Forwards window, query a deal that you want to view.

  2. To view the history of the selected deal, choose the Contract History button.

Foreign Exchange Options

Use the Foreign Exchange Options window to enter various types of foreign exchange options including put or call options, American or European style options, and knock in or knock out options.

Knock in options do not have value until the spot rate hits a pre-set value. Knock out options have value until the spot rate hits a pre-set knock out level. The value of the knock depends on whether the option is a put or a call.

Use this window to track information about your options, including the break-even rate, which is automatically calculated for every option, and the date that you exercise an option.

When you exercise a foreign exchange option, you automatically create a foreign exchange deal.

To revalue a foreign exchange option, you must have either exercised an option, changed the option status to Expired, or the option must have value if it is a knock in or knock out option.

Entering Foreign Exchange Options

Use the Foreign Exchange Options window to enter foreign exchange option deals.

To enter a foreign exchange option

  1. In the Dealer field of the Foreign Exchange Options window, select the dealer who is managing the option.

  2. In the Company field, choose the company for the deal.

  3. In the Counterparty field, choose the party for the deal.

  4. If you are entering into the option on behalf of a client, in the Client field choose the client.

  5. In the Portfolio field, choose a portfolio for the option.

  6. In the Limit field, choose a limit to apply to the option.

  7. In the [ ] field, enter the descriptive flexfield information as required. For information on descriptive flexfields, see: Oracle E-Business Suite Flexfields Guide.

  8. In the Deal Subtype and Product Type fields of the Main Details tabbed region, select a deal subtype and product type for the option.

  9. In the Foreign Currency field, select the currency being optioned.

  10. In the Option Type field, select the type of option being entered. Select Put if you want the option to sell a currency at a specified rate. Select Call if you want the option to buy a currency at a specified rate.

  11. In the Domestic Currency field, choose the contra currency for the option. The Buy Currency and Sell Currency fields are automatically populated based on the default currencies for the selected company.

  12. In the Strike Rate field, enter the rate at which you can buy or sell the currency being optioned.

  13. If the deal is an American-style option, in the Start Date field enter a start date. Leave the field blank if the deal is a European-style option. If you enter a start date for the option, the Option Style field automatically changes to American. If you leave the field blank, the Option Style field stays as European.

  14. In the Expiration Date field, enter an expiration date for the option.

  15. In the Buy Amount and the Sell Amount fields, enter the amount of currency being optioned, and the amount being sold.

  16. Enter information about the option premium in the Premium Details tabbed region. This region contains the following fields.

  17. Complete the fields in the Additional Details tabbed region as needed.

  18. To create a knock in or knock out option, in the Knock In/Knock Out tabbed region, do the following:

  19. Save your work.

Exercising a Knock In or Knock Out Foreign Exchange Option

You can exercise a foreign exchange option that is a knock in or a knock out option if the option has value.

To exercise a knock in or knock out foreign exchange option

  1. Query the option that you want to exercise.

  2. Choose the Execute Knock In/Out button. The Enter Knock Date window appears.

  3. In the Knock Execute Date field, enter the date that you want to exercise the option. The execute date must be between the deal date and the option expiration date.

  4. Choose the Save button. A decision window appears.

  5. Confirm that you want to exercise the option by choosing the OK button.

    When you confirm the knock the date is populated in the Knock Execute Date field in the Knock In/Knock Out tabbed region and the Execute Knock In/Out button is disabled.

Viewing a Summary of Foreign Exchange Options

Use the Transaction Summary window to view a summary of your foreign exchange options.

To view a summary of foreign exchange options

Viewing Foreign Exchange Options

Use the View Foreign Exchange Options window to view the details for a single foreign exchange option or a summary of your foreign exchange options.

To view the details of a foreign exchange option

  1. In the View Foreign Exchange Options window, query the option you want to view. The option details appear in the window.

  2. If you want to view a summary of all of your foreign exchange options, choose the Summary button. The View Transaction Summary window appears. All of your foreign exchange options are listed.

Rollovers and Predeliveries

When a foreign exchange deal reaches maturity, you can roll it over into another foreign exchange deal or you can take a cash settlement.

You can also pre-deliver a foreign exchange deal before it reaches maturity. Use the Foreign Exchange Rollover/Predelivery window to view the before and after details of any deal you roll over or predeliver.

Rolling Over or Predelivering Foreign Exchange Deals

Use the Foreign Exchange Rollover/Predelivery window to roll over or predeliver one or more foreign exchange deals at a time.

To roll over or predeliver a foreign exchange deal

  1. In the Find Deals window, if you want to roll over or predeliver a single deal, select the Single Deal option. If you want to roll over or predeliver multiple deals, choose the Multiple Deals option.

  2. Complete the fields in the Find Deals window as needed to find the deal you want to roll over or predeliver. Choose the Find button. The Foreign Exchange Rollover/Predelivery window appears.

  3. To roll over deals, select the deals that you want to roll over and choose the Rollover button.

    To predeliver one or more deals, select the deals you want to predeliver and choose the Predeliver button.

    The Rollover/Predelivery Details window appears. The fields in the window are automatically populated based on deals selected.

    Note: If you roll over multiple deals into a single deal, you cannot view a history for the resulting rollover deal.

  4. In the Limit field, choose a limit for the deal.

  5. To link this deal to another deal, in the Link Code field select a link code.

  6. To enter comments about the roll over, complete the Internal Comments and External Comments fields.

  7. Insert your cursor in the Deal Date field. The current system date appears in the field.

  8. Insert your cursor in the Deal Number field. The details for the deals you selected automatically appear.

  9. In the Trans Rate field, enter the new rate for the rolled over or predelivered deal. The sell amount for the new deal is automatically calculated and entered in the Sell Amount field.

  10. Save your work.

Viewing the Rollover History of Foreign Exchange Deals

Use the View Foreign Exchange Rollovers/Predeliveries window to view the history of your rolled over foreign exchange deals. You cannot view the history for multiple deals that are rolled into a single deal.

To view the rollover history of a deal