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Oracle Treasury User Guide
Release 12.1
Part Number E13426-04
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Money Market Deals

This chapter covers the following topics:

Money Market Deals

This section explains how to enter money market deals, including:

These deal types are the basic building blocks for any treasury deal. You can use each deal type as is, or you can combine several deal types to create a more complex deal.

Short Term Money

This section describes the deals that you perform when you borrow or invest funds on a short-term basis.

Short term money, also referred to as call cash, is money that is either loaned or borrowed for a very short period of time, such as short term funding, straight loan, money market, and overnight cash. For short term money deals, a party to the deal can request payment with same day, one day, or two days notice.

Each time you renegotiate or rollover a deal, you can repay all or part of the principal, increase the principal, or reset the interest rate and term. You can also choose to settle or compound the interest.

Each short term money deal can consist of one or more transactions. The window contains two main regions:

See the following topics to define and manage your short term money deals.

Common Details for Short Term Money Deals

Before you can work with a short term money deal, you must identify or enter the common deal information in the Common Deal Details region of the window. To identify predefined short term money deals, query the combination of deal subtype, company, counterparty, portfolio, client, year basis, and currency for a deal. If you query a specific combination and find it does not exist, you can enter that combination in the Common Deal Details region and continue to work with the deal.

Identifying or Entering Common Deal Details for Short Term Money Deals

Use the Short Term Money window to identify or enter the common deal details for a short term money deal.

To identify or add short term money deals

  1. In the Common Deal Details region of the Short Term Money window either query the short term money deal or complete the fields as required.

    Any deals that match either your query criteria or the fields you completed, appear in the Current Transactions for Above and Trans History for Above Cparty tabbed regions of the window.

  2. If no pre-existing deal matches the fields you entered, then a short term money deal with that criteria does not exist. To create a short term money deal with the specified criteria, save your work.

    Once you query or add the common deal details you can enter the details for your short-term money deals. See: Transaction Details for Short Term Money Deals.

Transaction Details for Short Term Money Deals

After you query or save the common deal details for a short term money deal, you can work with the transactions that comprise the deal. You can enter the transaction details for short term money deals using the Short Term Money window or the Quick Deals window.

Entering Short Term Money Deal Transactions

Use the Short Term Money window to enter the transaction details for your short term money deals.

For short term money (ONC), you can calculate flat tax on the interest amount (INS_F), annual tax on the principal amount (PRN_A), and flat tax on the principal amount (PRN_F).

Prerequisite

To enter a short term money deal transaction

  1. Navigate to the Short Term Money window.

  2. In the Common Deal Details region, choose the deal that you want to enter a transaction for, then choose the Transactions button. The Transaction Details window appears. The Dealer field is automatically populated based on the application user login. The Deal Status field is CURRENT for new deals, and the Deal Date field is populated with the current system date.

  3. Tab through the Deal Subtype, Company, Counterparty, Client, Currency, Day Count Basis, and Portfolio fields. The data from the Common Deal Details region of the Short Term Money window appears.

  4. Choose the Main Details tabbed region.

  5. In the Security Type field, choose the security type for the short term money deal. The possible security types are Secured or Unsecured.

  6. In the Product Type field, choose a product type for the deal.

  7. In the Settlement Date field, enter a settlement date for the deal.

  8. If the transaction has a pre-set maturity date, in the Maturity Date field, enter the maturity date. The Days field displays the number of days between the settlement date and the maturity date.

  9. If you want to link the transaction to another transaction or group of transactions, in the Link Code field choose a link code. For more information on Link Codes, see: Deal Linking Codes.

  10. In the Principal Amt field, enter the principal amount for the transaction.

  11. If you want to apply a limit to the transaction, in the Limit field choose a limit.

  12. Choose the Interest Details tabbed region and complete the following fields as necessary:

  13. Choose the Additional Details tabbed region and complete the fields as needed.

  14. In the Brokerage/Tax tabbed region, complete the fields as needed.

  15. Save your work.

  16. To add another transaction for this deal, choose the New Transaction button.

Entering Short Term Money Quick Deals

You can also use the Quick Deals window to enter short term money deals. Using this window you can enter the most important information when you make the deal and then return to the quick input deal and complete the deal details when you have more time.

You must complete the deal details before you can view your short term money quick deals in the View Short Term Money or View Deals windows.

Prerequisite

To enter a short term money deal quickly

  1. In the Common Deal Details region of the Short Term Money window, query or enter the common deal details for the deal that you want to enter quick transactions for. Then, choose the Quick Input button. The Quick Deals window appears.

  2. Enter the deal details. For information on how to enter quick deal details, see: Quick Deals.

Completing Short Term Money Quick Deals

You must complete the details for a short term money deal to view your short term money quick deals in the Transaction Details window.

To complete a short term money quick deal

  1. In the Common Deal Details region of the Short Term Money window, query the common deal details for the deal that you want to complete. Then, choose the Quick Input button. The Quick Deals window appears.

  2. Select the deal transaction that you want to complete and choose the Complete Details button. The Transaction Details window appears, displaying the information that you already entered on the Quick Deals window.

  3. To complete the remaining fields, see: Entering Short Term Money Deals.

Consolidating Transactions in Short Term Money Deals

You can consolidate short term money transactions with similar details. Consolidating transactions minimizes the need to repeat the same actions. For example, if a deal contains three separate deposits with the same counterparty, you can combine them into a single deposit to avoid renegotiating the transactions separately.

To consolidate short term money transactions

  1. In the Short Term Money window, query the common deal details of the transactions that you want to consolidate.

  2. Choose the Consolidate button. The Renegotiation Criteria window appears.

  3. In the Criteria For Reneg Repay region, define the criteria you want to use to select the transactions to renegotiate by entering or changing information.

  4. In the Default Details For New Renegs region, enter the default values for the consolidated transaction.

  5. Use the following buttons, as needed, to consolidate your transactions:

  6. Save your work.

Renegotiating Short Term Money Deals

Use the Renegotiation Details window to renegotiate the repayment terms for transactions in a short term money deal. You can enter information related to the increase or repayment of principal on short term money transactions, as well as the new interest rate and maturity date.

If your transaction includes the prepaid interest option and the interest amount has been authorized for settlement or journalized, renegotiating such a transaction before the maturity date will result in an interest refund.

To renegotiate a short term money deal

  1. In the Common Deal Details region of the Short Term Money window, query and then select the deal that you want to renegotiate.

  2. In the Current Transactions for Above Deal tabbed region, choose the transaction that you want to renegotiate and choose the Select Above Row for Reneg button. The details for the transaction appear in the Renegotiation Details window.

  3. To consolidate and renegotiate a transaction, check the Reneg check box next to the transaction. If you want to renegotiate all of the transactions at the same time, check all of the check boxes. Only the records that have the Reneg check box checked are saved.

  4. In the Reneg Date field, enter the date that you want to renegotiate the deal transaction. The default date is either the transaction maturity date or the current system date.

  5. In the Accrued Interest field, the total amount of accrued interest appears. You can override this calculated interest amount by entering a new interest amount. The System Interest field shows the original interest amount calculated by the system.

    Note: You can only override interest amounts if you have the appropriate user access levels. See: User Access Levels.

  6. In the Interest Action field, select the action you want to perform for the interest that has accrued to date. If the transaction has prepaid interest, the interest action defaults to None and is not updateable.

  7. In the Client Settle Via field, choose a method that the client will use to settle the interest on the transaction.

  8. In the Principal Action field, choose the action that you want to perform on the principal. The choices are:

  9. If you chose Increase or Decrease in the Principal Action field, in the Principal Adjustment field enter the amount to increase or decrease the principal. The balance is recalculated and appears in the Balance Carry Fwd field. If the Prepaid Interest option is enabled, Treasury recalculates the prepaid interest on the new principal.

    If you increase the principal, Treasury calculates the principal tax, interest tax, and brokerage fee according to the schedule. The Brokerage Amount field displays the brokerage fee. The Brokerage/Tax tabbed region of the Transaction Details window displays the principal and interest tax.

  10. In the Client Principal Via field, choose a method that the client will use to settle the principal on the transaction.

  11. In the Rate field, enter the rate that applies from the renegotiation date onward.

  12. If necessary, choose the new Product Type.

  13. If necessary, update the Maturity Date. You must enter a date if the transaction includes prepaid interest.

    The Prepaid Interest check box indicates whether the original transaction included prepaid interest. If the transaction included prepaid interest, the Interest Due On field displays the renegotiation date. Otherwise it displays the deal maturity date.

  14. In the Brokerage Amount field, you can manually enter a brokerage amount if you want to override the system-calculated brokerage amount for the transaction.

  15. Save your work.

Viewing Short Term Money Deals

Use the View Short Term Money window to view the details of a short term money deal.

To view a short term money deal

  1. In the View Short Term Money Deal window, query the deal you want to view.

  2. If you want to view a list of short term money quick input deals, choose the Quick Input button.

Intercompany Funding

Use intercompany funding deals to centrally manage the debt and investment relationships between a company and the parties (either companies or counterparties) that are part of its intercompany group.

If you enter into an intercompany funding deal with another company, journal entries are automatically created for both companies. If you enter into an intercompany funding deal with a counterparty, journal entries are only created for the company.

Note: If you enter into a company to company intercompany funding deal, and the two companies in the deal use a different chart of accounts structure, those companies will generate very different journal entries. If you plan to enter into company to company intercompany funding deals, ensure that you define the journal entry actions for the IG deal type for each company correctly. Consult a functional accounting person to determine the correct journal entry structure for your company to company intercompany funding deals.

You define the way that journal entries are generated for each company in the Journal Entry Actions window (see: Journal Entry Actions). All journal entries that are generated for intercompany funding deals can be posted to General Ledger using the Daily Journals window (see: Daily Journals).

Setting Up Intercompany Interest Rates

Use the Bank Account Interest Rates window to set up the default interest rates that you want to use for your intercompany funding deals. There are two types of intercompany interest rates that you can define:

To set an intercompany interest rate

  1. In the Intercompany Funding window, choose the company that you want to define an intercompany interest rate.

  2. If you want to define a global interest rate, choose the Global Interest button. The Bank Account Interest Rates window appears.

  3. If you want to define a specific interest rate, choose the party and the currency that you want to set a rate for and choose the Specific Interest button. The Bank Account Interest Rates window appears.

  4. In the Effective Date field, enter the date that you want the rate to become effective on.

  5. In the Account Balance Low and the Account Balance High fields, specify the balance range that you want the interest rate to apply to. For example, 100 to 1,000,000.00.

    Tip: To effectively set up intercompany interest rates, ensure that the value in the Account Balance Low field as close as possible to the value in the Account Balance High field of the preceding rate. For example, if you set the Account Balance High value for one range as $1,000,000.00, set the Account Balance Low value for the following range as $1,000,000.01.

  6. In the Interest Rate field, enter the default interest rate for the balance range.

  7. Repeat steps 1 to 6 for each global or specific intercompany interest rate you want to set up.

  8. Save your work.

Entering Intercompany Funding Deals

Use the Intercompany Funding window to record intercompany funding deals between a company and parties that are part of the company's intercompany group.

To enter an intercompany funding deal

  1. Navigate to the Intercompany Funding window.

  2. In the Company field, choose the company for the deal. The default bank account number, currency, day count basis, interest rate and portfolio for the company are automatically populated in the appropriate fields. The Transfer Date field is automatically populated with the current system date.

  3. In the Intercompany Party field, choose the deal party. The party must be part of the company's intercompany group.

    If you choose another company, journal entries are generated for both companies in the deal. The default bank account number for the intercompany party appears in the Party Account field.

  4. If you do not want to use the default account, currency, day count basis, or interest rate for the deal, change the values as required.

    The default interest rate for an intercompany funding deal defaults in based on the predefined global interest rate (for a company and balance combination), or on a specific interest rate (for a company, party, currency, and balance combination). To view the global interest rates for the company, choose the Global Rates button. To view the specific interest rates for the company, choose the Specific Rates button. For more information on setting up global and specific interest rates, see: Setting Up Intercompany Interest Rates.

  5. Choose the Main Details tabbed region.

  6. In the Action field, select the action for the intercompany funding deal. Choose PAY, if the company is transferring funds to the intercompany party. Choose REC if the company is transferring funds from the intercompany party.

  7. In the Principal Adjust field, enter the amount transferred.

    In the Balance field, the balance of funds transferred between the company and the intercompany party appears. If the intercompany party owes the company, then the balance is positive. If the company owes the intercompany party, then the balance is negative.

  8. In the Accrued Interest field, the total amount of accrued interest for the intercompany funding deal appears. You can override this calculated interest amount by entering a new interest amount. The System Interest field shows the original interest amount calculated by the system.

    Note: You can only override interest amounts if you have the appropriate user access levels. See: User Access Levels.

  9. Enter the date that the interest is settled in the Interest Settlement Date field if you want to settle interest on the deal.

  10. Enter the amount of interest that is settled in the Interest Settled field.

  11. In the Interest Rounding field, choose the rounding rule that you want to use for calculating interest on the deal. The possible choices are: Nearest, Round Up, or Round Down.

  12. In the Interest Includes field, choose the days that you want to include when the interest is calculated on the deal. The possible choices are: First Day, Last Day, or Both Days.

    Note: If you select Both Days for Interest Includes, you cannot use the 30/360, 30E/360, or 30+/360 day count basis.

  13. Choose the Company Details tabbed region.

  14. In the Portfolio and Product Type fields, choose a product type and a portfolio type for the deal.

  15. In the Pricing Model field, enter the pricing model for this deal. Choose Face Value if you want the revaluation process to calculate currency gains and losses or No Revaluation to turn off revaluation.

  16. In the Funding Limit field, choose a counterparty limit code that will apply to negative balances. In the Investment Limit field, choose a counterparty limit code that will apply to positive balances.

    Funding and Investment limits are defined in the Limits window. See: Limits.

  17. In the [ ] Descriptive Flexfield, complete the flexfield as necessary. For information on descriptive flexfields, see: Oracle E-Business Suite Flexfields Guide.

  18. If the intercompany party that you entered is defined as a company, navigate to the Intercompany Party Details tabbed region. Enter portfolio, product type, pricing model, funding limit, investment limit, and comments for the intercompany party.

  19. Save your work.

  20. If you want to view principal and interest amount settlements associated with an intercompany funding deal, choose the Transaction Summary button. The Transaction Summary window displays a history of the principal and interest amount settlements.

Importing Intercompany Funding Deals

If you need to enter intercompany funding deals frequently, and the deal details are available in electronic sources such as bank files or other third party applications, you can use the XTR_DEALS_INTERFACE table and the Deal Interface Summary window to import the deal details into Treasury. For more information on importing intercompany funding deals, see: Importing Deals into Treasury.

Managing Interest Actions for Intercompany Funding Deals

If you settle or compound interest on several deals at the same time, use the Deal Management window to define the bulk processing for interest actions associated with your intercompany funding deals.

If you want to take the same interest action for all of the intercompany funding deals for a particular company, you can set global interest actions for that company in the Deal Management window.

If you want to pool all of the interest for your intercompany funding deals, see: Creating Intercompany Cash Pools.

To manage interest for intercompany funding deals

  1. In the Intercompany Funding window, choose the Deal Management button. The Find Deals window appears.

  2. Complete the appropriate fields to find the intercompany funding deal or deals that you want to manage interest for. The deals appears in the Deal Management window.

  3. Choose the Interest Management tab.

  4. To define the interest action for a particular deal, do the following:

  5. To define the interest action for all of the deals displayed in the Deal Management window, choose the Set Global Interest Actions button. The Global Interest Actions window appears. Choose an interest action, either Settle, Compound, or None and then choose the Apply button.

  6. If you want to only take action on part of the accrued interest, in the Interest Amount field, you can change the amount accordingly.

  7. Change the other updatable fields in the Interest Management and Interest Management Additional Details tabbed regions.

  8. Choose the Apply button or save your work to generate the settlement and compound interest transactions.

  9. If you want to view a summary of the principal and interest amounts associated with an intercompany funding deal, choose the Transaction Summary button. The Transaction Summary window appears.

Creating Intercompany Cash Pools

You can use intercompany cash pools to group the intercompany accounts for a company and collectively calculate interest on those accounts. An intercompany cash pool is a nominal setoff account. A cash pool can only group accounts of the same currency for parties in the same intercompany group. To create an intercompany cash pool, create a notional cash pool for your intercompany group. For more information, see Cash Leveling in Oracle Cash Management.

Wholesale Term Money

Wholesale term money deals are used to borrow large amounts from banks and institutions, rather than from small investors. Examples of wholesale term money deals include promissory notes and private debt placements. These types of deals can be fixed or floating rate and are generally not exchanged.

You can automatically reset the floating rates in your wholesale term money deals by setting a benchmark rate and a margin and then running the Reset Floating (Benchmarked) Rates program. For more information, see: Reset Floating (Benchmarked) Rates.

Entering Wholesale Term Money Deals

Use the Wholesale Term Money window to enter you wholesale term money deals.

For Wholesale Term Money (TMM), you can calculate flat tax on the interest amount (INS_F), annual tax on the outstanding principal (PRN_A), flat tax on the starting principal amount (PRN_F), flat tax on the starting principal and subsequent principal increases (PRN_INC_F), flat tax on principal repayments (PRN_DEC_F), and flat tax on the maturity amount (MAT_F).

To enter a wholesale term money deal

  1. Navigate to the Wholesale Term Money window.

  2. Choose a company and counterparty for the deal in the Company and Counterparty fields.

  3. If you are acting as a broker for a client, in the Client field choose a client.

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

  5. If you want to apply a limit to the deal, in the Limit field choose a limit.

  6. In the [ ] Descriptive Flexfield, complete the flexfield as required. For more information on descriptive flexfields, see: Oracle E-Business Suite Flexfields Guide.

  7. Choose the Main Details tabbed region.

  8. In the Deal Subtype and Product Type fields, select a deal subtype and a product type for the deal. The brokerage details appear for the selected product.

  9. In the Currency field, choose a currency for the deal.

  10. In the Principal Amount field, enter a principal amount for the deal.

  11. In the Day Count Basis field, select the day count basis that you want to use to calculate interest on the deal.

  12. In the Start Date and the Maturity Date fields, enter a start date and a maturity date for the deal.

  13. Choose the Interest Details tabbed region.

  14. In the Initial Basis field, select the type of rate for the deal, either Fixed or Float.

  15. In the Interest Rate field, enter an interest rate for the deal.

  16. Enable the Prepaid Interest check box if you intend to settle the interest on the start date of each transaction rather than the maturity date.

  17. Enter a rate in the Benchmark Rate field. Choose a rate that you want to use as the benchmark for resetting the floating rate. For example, if you want to reset the floating rate based on the U.S. dollar 1-Month rate as the benchmark, choose the reference code that you set up for U.S. dollar 1-Month in Current System Rates.

  18. Enter a margin for the deal in the Margin field. The margin is used for resetting the floating rate and should be entered in basis points and can be positive or negative. For more information on resetting floating rates, see: Reset Floating (Benchmarked) Rates program.

    Note: You can leave the Benchmark Rate and Margin fields blank and adjust your floating interest rates manually.

  19. To generate month-end dates for maturity dates and corresponding interest due on dates, enable the Force Month End check box.

    Note: To ensure month-end dates, you must also set the Business Day Convention Maturity Dates field and Interest Due On Dates field to No Adjustment. To ensure that month-end dates that fall on weekends or holidays are automatically adjusted to business days, choose another value according to your needs.

    The Force Month End option does not affect the maturity date of the deal.

  20. In the Business Day Convention region, choose a setting for Maturity Dates and/or Interest Due On Dates. Treasury adjusts the dates that fall on non-business days according to the settings that you choose. The choices are: Following, Modified Following, Modified Previous, No Adjustment, and Previous.

    You can apply a separate adjustment to each field:

  21. In the Payment Frequency field, choose an interest payment frequency for the deal. Possible frequencies are Weekly, Monthly, Quarterly, Semi-Annual, or Annual.

  22. In the First Transaction Maturity field, you can update the maturity date of the first transaction based populated by Treasury. Treasury populates this date based on the values of Start Date, Force Month End, Business Day Convention Maturity Date, and Payment Frequency. If you change the populated date, then Treasury will base future maturity dates and interest due on dates on this modified date rather than the deal's start date.

  23. Choose the rounding rule that you want to use to calculate interest in the Interest Rounding field. The possible choices are: Nearest, Round Up, or Round Down.

  24. Choose the day that you want to include when you calculate interest on the deal in the Interest Includes field. The possible choices are: First Day, Last Day, or Both Days.

    Note: If you select Both Days for Interest Includes, you cannot use the 30/360, 30E/360, or 30+/360 day count basis.

  25. In the Additional Details tabbed region, complete the fields as necessary.

  26. In the Brokerage/Tax tabbed region, complete the fields as necessary.

    Note: For both principal and interest tax, the tax rate effective on the settlement date of the deal is used in the calculations. Any change that occurs in the tax rate is not reflected.

  27. Save your work. The deal is checked against the applicable limits and the Transaction Details window appears. This window lists the details of each transaction or payment period in the wholesale term money deal.

  28. If you have deals with floating interest rates and you want to reset the floating interest rates based on the benchmark rates and margins, run the Reset Floating (Benchmarked) Rates concurrent program. For more information, see: Reset Floating (Benchmarked) Rates program.

  29. In the Interest Due On field, Treasury populates the settlement due date. You can update the populated date, if necessary.

    This date is used as the journal date of the interest payment.

  30. Save your work.

Adjusting Principal for Wholesale Term Money Deals

You can adjust the principal on one or more transactions in a wholesale term money deal at any time during the period of the deal. For example, you can add a payment in the middle of a payment period.

You can enter either a single adjustment or create a schedule of multiple adjustments. For multiple adjustments, you can review and recalculate your adjustment schedule before saving.

To enter principal adjustments for a wholesale term money deal

  1. In the Wholesale Term Money window, query the deal you want to adjust.

  2. Choose the Principal Adjustment button. The Principal Adjustments window appears.

  3. Enter the Adjustment Amount.

  4. Select the Principal Action, either Increase or Decrease.

  5. Select an Adjustment Type of Single or Multiple.

  6. Enter the Effective date for the adjustment.

  7. If you are creating a single adjustment, save your work.

  8. If you are creating multiple adjustments, select the adjustment Frequency. The choices are: Weekly, Monthly, Quarterly, Semi-Annual, or Annual.

  9. Enable the Force Month End check box to generate month-end dates for the adjustment effective dates.

  10. In the Business Day Convention field, select a setting for the Effective dates that fall on non-business days. The choices are: Following, Modified Following, Modified Previous, No Adjustment, and Previous. The setting you choose affects both the adjustment effective dates and the maturity date of the preceding transaction.

    If you enable the Force Month End check box, enter No Adjustment.

  11. Choose the Review Schedule button to open the Review Schedule window. Use this window to review your principal adjustments.

    The Non Business Day column indicates the adjustment dates that fall on non-business days. The Existing Adjustment column indicates the adjustments that already exist for this deal.

  12. If necessary, you can update the Amount and corresponding Action of any adjustment date. You can also delete any principal adjustment that is not pre-existing. Choose the Recalculate button to review the new principal adjustments.

  13. Save your work.

Adjusting Interest for Wholesale Term Money Deals

You can adjust the interest on a wholesale term money deal at any time during the period of the deal.

To adjust the interest rate for a wholesale term money deal

  1. In the Wholesale Term Money window, query the deal you want to adjust.

  2. Choose the Interest Adjustment button. The Interest Rate Adjustments window appears.

  3. Enter a new interest rate.

  4. Select a period in which you want the interest rate to take effect.

  5. If you want the interest rate to expire on a certain date, enter the date in the Applies Until field. If you do not enter a date in this field, the rate applies to every period after the effective date.

  6. Save your work.

Settling Interest for Wholesale Term Money Deals

Use the Transaction Details window to settle interest for specific transactions in a wholesale term money deal. You can also specify the date on which you want to settle your payments.

To settle interest for a wholesale term money deal

  1. In the Wholesale Term Money window, query the deal you want to settle.

  2. Choose the Transaction Details button. The Transaction Details window appears.

  3. In the Gross Interest field, the total amount of gross interest for the wholesale term money deal appears. You can override this calculated interest amount by entering a new interest amount. The System Interest field shows the original interest amount calculated by the system.

    Note: You can only override interest amounts if you have the appropriate user access levels. See: User Access Levels.

  4. If necessary, update the corresponding Maturity Date.

    If this transaction includes prepaid interest, the displayed Interest Due On date is equal to the transaction start date. Otherwise, the displayed date is equal to the transaction maturity date.

  5. For each transaction that you want to settle, check the Settle Interest check box.

    If you deselect the Settle Interest check box, the interest for that payment will be added to the settlement for the following payment.

    If this transaction includes prepaid interest, the Interest Refund displays either the refund amount issued after the principal decrease or the amount of additional prepaid interest issued after the principal increase.

  6. Save your work.

Viewing Transaction Details for Wholesale Term Money Deals

Use the Transaction Details window to view the individual transactions that are part of a wholesale term money deal.

To view the transaction details for a wholesale term money deal

  1. In the Wholesale Term Money window, query the deal that you want to view.

  2. Choose the Transaction Details button. The Transaction Details window appears listing all of the transactions for that deal.

Viewing Wholesale Term Money Deals

Use the View Wholesale Term Money window to view the details for a wholesale term money deal.

To view a wholesale term money deal

  1. In the View Wholesale Term Money window, query the deal that you want to view.

  2. If you want to view the individual transactions that make up the wholesale term money deal, choose the Transaction Details button. The View Transaction Details window appears.

Retail Term Money

Retail term money is a deposit or loan that has regular payments over a period of time, such as interest only, or principal and interest. Some retail term money deals have other fees, such as establishment fees that can increase the total amount of the deal. This increase does not generate cash flows, but it does increase the amount of the deal. Mortgages, sinking funds, and hire purchases are all examples of retail term money deals.

Repayment terms for retail term money differ from all other deal types. The due dates for retail term money deals are only forecast dates (except for principal adjustments). The forecast date and the split between the interest and the principal are calculated automatically, so when you actually receive funds, the split is recalculated to apply funds to outstanding interest up until the date when the funds are received. The balance is then applied to the outstanding principal. The repayment of funds is tracked through the bank reconciliation process, which automatically updates the transaction rows for retail deposits and advances, and sets the dates for settlement. The transaction is then ready to post journal entries.

Entering Retail Term Money Deals

Use the Retail Term Money window to enter your retail term money deals.

To enter a retail term money deal

  1. Navigate to the Retail Term Money window.

  2. Select the company and counterparty for the deal in the Company and Counterparty fields.

  3. If you are acting as a broker for a client, select the client.

  4. Select a portfolio for the deal.

  5. In the Deal Subtype and Product Type fields in the Main Details region, select a deal subtype and product type for the deal respectively.

  6. In the Currency field, choose a currency. The default bank accounts for selected currency for the company and counterparty automatically appear in the Additional Detail region.

  7. In the Principal Amount field, enter the principal amount for the deal.

  8. In the Day Count Basis field, choose the day count basis for the deal. The day count basis determines the number of days in a year used to calculate accrued interest on the deal. The possible day count bases are: actual/actual, actual/360, actual/365, actual/actual-bond, actual/365L, 30/360, 30E/360, 30E+/360. For more information on how each day count basis is calculated, see: Treasury Terms.

  9. In the Start Date and Maturity Date fields, enter a start date and a maturity date respectively.

  10. Choose the Interest Details tabbed region.

  11. Select a payment schedule for the deal in the Payment Schedule field. For more information on setting up payment schedules, see: Payment Schedules.

  12. In the Initial Basis field, select the type of interest rate, either Fixed or Floating, for the deal.

  13. In the Interest Rate field, enter the interest rate. The deal payments are calculated using this rate and are automatically entered into the Repayments field.

  14. Choose the rounding rule that you want to use to calculate interest on the deal in the Interest Rounding field. The possible choices are: Nearest, Round Up, or Round Down.

  15. Choose the days that you want to include when you calculate interest on the deal in the Interest Includes field. The possible choices are: First Day, Last Day, or Both Days.

    Note: If you select Both Days for Interest Includes, you cannot use the 30/360, 30E/360, or 30+/360 day count basis.

  16. In the Repayment Amount field, enter the amount of the deal that you are repaying.

  17. In the Additional Details region, complete the necessary fields.

  18. In the Brokerage region, complete the necessary fields.

  19. Save your work.

Adjusting Principal for Retail Term Money Deals

You can adjust the principal on your loans as needed. For example, you may need to increase the loan amount or add a repayment in the middle of a roll period.

You can only decrease principal through an adjustment if the decrease occurs on a date that is not an existing settlement date. Otherwise, the outstanding principal is automatically adjusted during reconciliation.

When you write off a balance, you create a journal entry that corresponds to the amount of interest and principal that you write off. The amount of the write off/write on applies against the principal amount, and the amount of interest applies against the amount of interest written off.

To adjust principal for a retail term money deal

  1. In Retail Term Money window, identify the deal for which you want to adjust principal.

  2. Choose the Transactions button. The Transactions window appears, listing all of the transactions for the deal.

  3. Choose the Principal Adjustment button. The Do Adjustments/Writeoffs window appears.

  4. Enter a date on which you want the adjustment to take effect.

  5. Select an amount type for the adjustment. For more information on defining amount types for retail term money deals, see: Deal Types and Product Types.

  6. In the Type of Adjustment field, select the type of adjustment that you want to make. The list of values available in this field differs depending on the amount type you selected.

  7. In the Adjustment Amount field, enter the amount by which you want to adjust the principle.

    The adjusted starting balance for the deal appears in the New Starting Balance field. The adjusted sum of the principal and interest payments for the deal appears in the New Principal And Interest fields.

  8. If you want to keep the value of your deal repayments constant and apply the principal adjustment to your final repayment only, select the Keep PI Constant check box. The value of your final repayment is automatically recalculated.

    Note: If you increase the principal of a retail term money deal and you want to extend the length of a deal to accommodate more repayments, you can manually extend the length of the deal.

    If you want to adjust the value of all of your repayments, do not select the Keep PI Constant check box. The value of each of your repayments is automatically recalculated.

  9. Save your work.

Adjusting Interest for Retail Term Money Deals

You can use the Interest Adjustment window to adjust the interest of your loans or deposits as needed.

To adjust the interest rate for a retail term money deal

  1. In the Retail Term Money window, query the deal for which you want to adjust the interest.

  2. Choose the Transactions button. The Transactions window appears.

  3. Choose the Interest Adjustment button. The Interest Adjustment window appears.

  4. Enter a new rate for the deal.

  5. Enter a date on which you want the new rate to take effect.

    The starting balance for the deal appears in the New Starting Balance field. The adjusted sum of the principal and interest payments for the deal appears in the New Principal And Interest fields.

  6. If the deal is a fixed rate deal, enter a date until which you want the new rate fixed.

  7. If you want to keep the value of your deal repayments constant and apply the interest adjustment to your final repayment only, select the Keep PI Constant check box. The value of your final repayment is automatically recalculated.

    Note: If you increase the interest of a retail term money deal and you want to extend the length of a deal to accommodate more repayments, you can manually extend the length of the deal.

    If you want to adjust the value of all of your repayments, do not select the Keep PI Constant check box. The value of each of your repayments is automatically recalculated.

  8. Save your work.

Changing Payment Schedules for Retail Term Money Deals

Use the Schedule Change window to adjust the payment schedule or change the maturity date for a retail term money deal.

Prerequisite

To change the payment schedule for a retail term money deal

  1. In the Retail Term Money window, query the deal for which you want to change the payment schedule.

  2. Choose the Schedule Change button. The Schedule Change window appears.

  3. If you want to change the maturity date of your deal, in the Maturity Date field, enter a date from which you want the payment schedule change to take effect.

  4. If you want to change the payment schedule for your deal, in the Schedule Code field, select a payment schedule.

    The number of payments remaining is recalculated and appears in the Num of Pymts Remaining field. The value of each repayment is also recalculated and appears in the New Principal and Interest field.

  5. Save your work.

Printing Confirmation Letters for Retail Term Money Deals

You can print the confirmation letters for principal adjustments and payment schedule change only through the Retail Term Money window. You can print confirmation letters for interest rate adjustments through the Retail Term Money window or through the Retail Transaction Rates window. See: Retail Transaction Rates.

Prerequisite

To print confirmation letters for changes to retail term money deals

  1. In the Retail Term Money window, query the deal for which you want to print a confirmation.

  2. Choose the Print Letters button. The Print Confirmations window appears.

  3. Select the template that you want to use for the confirmation letter.

  4. Choose Submit to launch the concurrent process and print the confirmation letter.

Viewing Retail Term Money Deals

Use the View Retail Term Money window to view the details of a retail term money deal.

To view a retail term money deal

  1. In the View Retail Term Money window, query the deal that you want to view.

  2. If you want to print a confirmation letter for the selected deal, choose the Print Letters button. For more information on printing confirmation letters for retail term money deals, see: Printing Confirmation Letters.

  3. If you want to view the settlement details for the selected deal, choose the Settlements button. The View Settlement Summary window appears.

  4. If you want to view the transactions that make up the selected deal, choose the Transactions button. The View Transactions window appears.

  5. If you want to view the repayment history of the selected deal, choose Transactions button. Then, in the View Transactions window, choose the Repayments button.

Viewing Transactions for Retail Term Money Deals

Use the Transactions window to view a list of transactions for your retail term money deals.

To view a summary of retail term money deals

  1. In the Retail Term Money window, query the deal for which you want to view a summary of transactions.

  2. Choose the Transactions button. The Transactions window appears. This window lists every transaction or payment period in the selected retail term money deal.

Viewing a Settlement Summary for Retail Term Money Deals

Use the Settlement Summary window to view a summary of your settlements for a retail term money deal.

To view a settlement summary for a retail term money deal

  1. In the Retail Term Money window, query the deal for which you want to view your settlement summary.

  2. Choose the Settlements button. The Settlement Summary window appears.

Viewing a Repayment History for Retail Term Money Deals

Use the Repayment History window to view a history of your deal repayments. This window lists the amount of each repayment, the average amount repaid, the number of overdue repayments, the total number of overdue for all repayments, and total amount of remaining repayments.

To view a history of repayments for a retail term money deal

  1. In the Retail Term Money window, query the deal for which you want to view your repayment history and choose the Transactions button. The Transactions window appears.

  2. Choose the Repayments button. The Repayment History window appears. This window lists every repayment for the selected retail term money deal.

Negotiable Securities

Negotiable securities are any investments that are negotiable in price such as discounted securities and fixed income securities.

This section describes how to issue, purchase, short sell, and resell negotiable securities such as bank bills, promissory notes, commercial papers, certificates of deposit, and treasury bills.

Discounted Securities

Discounted securities are securities that trade for less than their face value or than their value at maturity. Each discounted security has one interest amount, which is included in the face value of the security. Interest on discounted securities can be calculated on a straight discount or on a yield basis.

Issuing, Buying, or Short Selling Discounted Securities

Use the Discounted Securities window to issue, buy, or short sell discounted securities.

Prerequisite

If you issue securities, set up the bill/bond issue numbers. See: Bill/Bond Issue Numbers.

To issue, buy, or short sell a discounted security

  1. Navigate to the Discounted Securities window.

  2. In the Company and Counterparty fields, choose a company and counterparty, respectively, for the deal.

  3. If you are conducting the deal for a client, in the Client field choose the client.

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

  5. If you are performing a trade and only expect one cash flow from the security at a set date in the future, check the Trade Bill check box. The transaction rate is automatically set to zero. You cannot override this rate.

    Note: Selecting this check box affects the list of available deal subtypes.

  6. In the [ ] Descriptive Flexfield, complete the descriptive flexfield information as required. For information on descriptive flexfields, see: Oracle E-Business Suite Flexfields Guide.

  7. In the Deal Subtype field of the Main Details tabbed region, choose a deal subtype for the deal. Select the Sell deal subtype only if you want to short sell a security. If you want to sell a security you already own, see: Reselling Discounted Securities.

    Note: If you checked the Trade Bill check box and you expect a positive cash flow, you must select the Buy deal subtype, which indicates that you will receive cash in the future (for example for delivering goods). If you checked the Trade Bill check box and you expect a negative cash flow, then you must select the Issue deal subtype, which indicates that you must make a payment in the future.

  8. In the Product field, choose a product type for the deal. The default discount basis for the select product type automatically appears in the Discount/Yield Basis field. For more information on setting the default discount basis see: Deal Types and Product Types.

  9. In the Currency field, choose a currency for the deal.

  10. In the Day Count Basis field, choose a day count basis for the deal. The day count basis is the number of days per year used to calculate interest on the deal. The possible day count bases are: actual/actual, actual/360, actual/365, actual/actual-bond, actual/365L, 30/360, 30E/360, 30E+/360. For more information on how each day count basis is calculated, see: Treasury Terms.

  11. In the Start Date field, enter a start date and in the Maturity Date field, enter a maturity date for the deal.

  12. Choose the Interest Details tabbed region.

  13. In the Discount/Yield Basis field, select Discount or Yield to indicate whether the deal is quoted on a discount rate or yield rate.

  14. In the Trans. Rate field, enter the rate for the deal.

  15. Choose the rounding rule that you want to use for calculating interest on the deal in the Interest Rounding field. The possible choices are: Nearest, Round Up, or Round Down.

  16. Choose the days that you want to include when the interest is calculated on the deal. The possible choices are: First Day, Last Day, or Both Days.

    Note: If you select Both Days for Interest Includes, you cannot use the 30/360, 30E/360, or 30+/360 day count basis.

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

  18. If you use mandatory limit checking, select a limit for the deal in the Risk Party Details tabbed region.

    Note: The limit you select must apply to either the Acceptor, Drawer, or Endorser of the deal. You must complete at least one of those fields in the Additional Details region to activate the list of values for the limit field.

  19. Choose the Brokerage/Tax tabbed region and complete the necessary fields.

  20. To enter the parcel details for the deal, choose the Parcel Details button. The Parcel Details window appears.

  21. In the Parcel Details window, enter the details of the various securities you bought, sold, or issued as part of the discounted security deal. Enter the details for one type of security in each row. If you buy or sell multiple securities of the same type, enter the details for the security once, then indicate the number of securities you bought or sold using the Size field. If you issue multiple securities of the same type, enter the details for each security you issue in a separate row.

    To enter the parcel details, do the following:

  22. Save your work.

Importing Discounted Securities

If you need to enter discounted securities frequently and the 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, XTR_TRANSACTIONS_INTERFACE table, and the Deal Interface Summary window to import Buy and Issue deal subtypes into Treasury. For more information, see: Importing Deals into Treasury.

Reselling Discounted Securities

Use the Discounted Securities Resale window to sell your discounted securities.

To resell a discounted security

  1. In the Find Discounted Security Resales window, query the security you want to resell. The Discounted Securities Resale window appears, listing all securities that match your query.

  2. Select the security to resell and choose the Parcel Details button. The Parcel Split Details window appears.

  3. In the Sell field, enter the number of securities that you want to sell. If the number you enter is greater than the number of securities listed in the Remaining field, you will short sell the difference of the securities.

  4. Choose the Done button. You return to the Discounted Securities Resale window.

  5. Choose the Create Resale Deal button. The Discounted Securities window appears with the part of the resale deal details already completed.

  6. Complete the details for the discounted security resale deal as needed.

  7. Save your work.

Viewing a Summary of Bill/Bond Issue Numbers

Use the Bill/Bond Issue Numbers window to view a list of your bill bond issue numbers.

Prerequisite

Set up bill/bond issue numbers. See: Bill/Bond Issue Numbers.

To view a summary of your bill/bond issue numbers

  1. In the Discounted Securities window, choose the Bill Issues button. The Bill/Bond Issue Numbers window appears.

  2. If you want to add a range of bill/bond issue numbers, choose the Enter Serial Number Range button. The Bill Bond Issue Numbers window appears. For more information on adding bill/bond issue numbers, see: Bill/Bond Issue Numbers.

Viewing a Summary of Short Sold Discounted Securities

Use the Short Sales window to view a summary of the discounted security deals you short sold.

To view a summary of short sold discounted securities

Viewing Discounted Securities

Use the View Discounted Securities window to view the details of a discounted security deal.

To view a discounted security

  1. In the View Discounted Securities window, query the discounted security deal that you want to view.

  2. If you want to view the list of securities that make up the selected discounted security deal, choose the Parcel Details button. The Parcel Split Details window appears.

  3. If you want to view a summary of all of your short sale discounted security deals, choose the Short Sales button. The Short Sales window appears.

Fixed Income Securities

A fixed income security is a long term tradable instrument that pays a regular coupon or interest at a fixed rate. Such securities are commonly called bonds, and include government stocks, and corporate bonds. They are generally issued by governments or blue chip companies.

You can automatically reset floating bond coupon rates by running the Reset Floating (Benchmarked) Bond Issue Rates program. For more information, please refer to Chapter 10, Inquiries and Reports.

Buying and Issuing Fixed Income Securities

Use the Fixed Income Securities window to input the purchase and issue of fixed income securities. You can also query and review the records once they are entered.

Prerequisite

To enter a fixed income security

  1. Navigate to the Fixed Income Securities window.

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

  3. In the Counterparty field, choose the counterparty.

  4. If you are acting as a broker for a client, in the Client field choose the client for the deal.

  5. In the Portfolio field, choose the portfolio for the deal.

  6. In the [ ] Descriptive Flexfield, complete the descriptive flexfield information as required. For information on descriptive flexfields, see: Oracle E-Business Suite Flexfields Guide.

  7. Choose the Main Details tabbed region.

  8. In the Deal Subtype field, choose a deal subtype for the deal. Choose the Sell deal subtype only if you want to short sell the deal. For information on selling fixed income securities, see: Reselling Fixed Income Securities.

  9. In the Issue Code field, choose a bond issue code for the deal. Issue codes are defined in the Bond Issues window.

    The Settlement Date, Issue Type, Currency, Maturity Date, Coupon Rate, Coupon Frequency, Next Coupon, Day Count Basis, and Security ID fields are automatically completed based on the issue code selected.

  10. You can choose the View Bond Issue button to display the View Bond Issues window with the details of the bond issue. For more information about bond issues, see: Bond Issues.

  11. If you want to change the settlement date, in the Settlement Date field, enter a new settlement date for the deal.

  12. In the Face Value field, enter the face value of the deal.

  13. Enter one of the following prices or rates, and the other prices or rate are automatically calculated:

  14. Choose the Interest Details tabbed region.

  15. In the Coupon Status field, select one of the following coupon statuses.

  16. Choose the rounding method you want to use to calculate interest on the deal in the Interest Rounding field. The possible choices are: Nearest, Round Up, or Round Down.

  17. Choose the days that you want to include when you calculate interest on the deal in the Interest Includes field. The possible choices are: First Day, Last Day, or Both Days.

    Note: If you select Both Days for Interest Includes, you cannot use the 30/360, 30E/360, or 30+/360 day count basis.

  18. Complete the fields in the Additional Details tabbed region and Brokerage/Tax tabbed region as needed.

  19. Choose the Coupon Summary tabbed region.

  20. In the Gross Coupon field, the total amount of interest for the fixed income security appears. You can override this calculated interest amount by entering a new interest amount. The System Coupon field shows the original interest amount calculated by the system.

    Note: You can only override interest amounts if you have the appropriate user access levels. See: User Access Levels.

  21. Save your work.

Reselling and Repurchasing Fixed Income Securities

You can make a full or partial resale of a fixed income security buy deal anytime before the deal reaches its maturity date. You can also make a full or partial repurchase of existing fixed income security issue deals before the maturity date.

Use the Fixed Income Securities For Resale/Repurchase Summary window to resell or repurchase a fixed income security.

Prerequisites

To resell or repurchase a fixed income security

  1. Navigate to the Find Fixed Income Securities For Resale/Repurchase window. query the security you want to resell.

  2. To resell a fixed income security, choose the Buy Deals for Resale radio button. To repurchase a fixed income security, choose the Issue Deals for Repurchase radio button.

  3. Enable the Include Matured Deals check box to include deals that have matured prior to the system date.

  4. Complete the Find Fixed Income Securities For Resale/Repurchase window and query the deals that you want. The Fixed Income Securities for Resale or Repurchase Summary window appears, listing all of the deals that match your criteria.

  5. In the Amount field of each deal that you want to resell or repurchase, enter the resale or repurchase amount. The resale or repurchase amount must be less than or equal to the remaining face value of the deal.

    Note: You can group more than one issue deal in the same resale or repurchase, provided that all issue deals have the same issue code, product type, and portfolio code.

  6. Choose the Complete Details button. The Fixed Income Securities window appears with some of the deal resale or repurchase details already completed.

  7. Complete the details for the resale or repurchase deal.

  8. Save your work.

Viewing the Coupons for a Fixed Income Security

Use the Coupons window to view a summary of the coupons for a fixed income security deal.

To view a fixed income security deal

  1. In the Fixed Income Securities window, query the security for which you want to review the coupon summary.

  2. Choose the Coupons button. The Coupons window appears.

Viewing Fixed Income Securities

Use the View Fixed Income Securities window to view the details for a fixed income security deal.

To view a fixed income security deal

  1. In the View Fixed Income Securities window, query the deal that you want to view.

  2. If you want to review the coupon summary for the selected deal, choose the Coupons button.

Derivatives

Derivatives include a broad range of risk management instruments, such as options and swaps.

This section describes how to manage derivatives.

Forward Rate Agreements

A forward rate agreement (FRA) is an agreement between two parties that determines an interest rate that applies to a notional loan or deposit at a future date.

When you make the agreement, you set the notional amount, term, and rate with the other party. You can enter one agreement at a time or enter several deals to cover your interest rate exposure for a longer deal, such as a loan.

When the agreement expires, you can settle the difference between the current interest rate and the agreed upon notional interest rate.

Entering FRAs

Use the Forward Rate Agreements window to enter the details of one or more FRAs.

To enter a FRA

  1. Navigate to the Forward Rate Agreements window.

  2. In the Company and Counterparty fields, select a company and counterparty for the agreement.

  3. If you are acting on behalf of a client, in the Client field choose a client for the agreement.

  4. In the Portfolio field, choose a portfolio for the agreement.

  5. In the Deal Subtype and Product Type fields, choose a deal subtype and product type for the agreement.

  6. In the Currency field, choose a currency and in the Face Value field, enter the face value of the agreement.

  7. In the Start Date and Maturity Date fields, enter a start date and maturity date for the agreement. The number of days covered by the agreement is automatically calculated using these dates and is entered in the Calculated Days field.

  8. In the Day Count Basis field, choose a day count basis for the agreement. The day count basis determines the number of days per year used to calculate interest on the deal. The possible day count bases are: actual/actual, actual/360, actual/365, 30/360, 30E/360, 30E+/360. For more information on how each day count basis is calculated, see: Treasury Terms.

  9. Choose the Interest Details tabbed region.

  10. In the Interest Rate field, enter an interest rate for the agreement.

  11. In the Reset Date field, enter the date on which both parties agree to reset the rate. As a default, the reset date is the deal start date.

  12. Choose the rounding rule that you want to use for calculating interest on the deal in the Interest Rounding field. The possible choices are: Nearest, Round Up, or Round Down.

  13. Choose the days that you want to include when interest is calculated on the deal in the Interest Includes field. The possible choices are: First Day, Last Day, or Both Days.

    Note: If you select Both Days for Interest Includes, you cannot use the 30/360, 30E/360, or 30+/360 day count basis.

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

  15. Save your work.

Entering Multiple FRAs

If you want to enter multiple FRAs that share the same company, counterparty, deal subtype, product type, currency, and face value, use the Multiple FRA Deals window. Typically, you enter multiple FRAs to hedge the interest rate for the entire length of another, longer term deal.

To enter multiple FRAs

  1. In the Forward Rate Agreements window, enter the details for the first FRA in the series. Follow steps 1 to 8 in Entering FRAs. See: Entering FRAs.

  2. Choose the Multiple FRAs button. The Multiple FRA Deals window appears.

  3. In a blank row, begin entering the details for the second FRA in the series by entering a start date and a maturity date for the agreement.

  4. In the Interest Rate field, enter an interest rate for the agreement.

  5. In the Reset Date field, enter the date on which both parties have agreed to reset the rate. As a default, the reset date is the deal start date.

  6. Repeat steps 2 to 5 for each FRA you want to add to the series.

  7. Save your work.

Settling FRAs

Use the Settlement Details region of the Forward Rate Agreements window to enter the settlement details for your FRAs. You cannot settle an FRA before the reset date or after the maturity date.

To enter the settlement details for a FRA

  1. In the Forward Rate Agreements window, query the FRA that you want to settle.

  2. Choose Yes to confirm that you want to settle the details for this FRA.

  3. Enter the date on which you want to settle the deal.

  4. In the Settlement Rate field, enter the rate that both parties agree to use to settle the FRA. The amount of the settlement is calculated using the deal currency and the settlement rate.

  5. Choose the rounding rule that you want to use to calculate interest in the Interest Rounding field. The possible choices are: Nearest, Round Up, or Round Down.

  6. Choose the days that you want to include when you calculate interest on the deal in the Interest Includes field. The possible choices are: First Day, Last Day, or Both Days.

  7. In the Settlement Amount field, the total amount of the settlement appears. You can override the settlement amount by entering a new amount. The System Settlement Amount field shows the original settlement amount calculated by the system.

    Note: You can only override interest amounts if you have the appropriate user access levels. See: User Access Levels.

  8. Select the company account to which you want to apply the settlement.

  9. Select the counterparty who you want to receive the settlement.

  10. Save your work. The FRA deal status changes to Settled.

  11. If you want to view the settlement details for the FRA, in the Forward Rate Agreements window, query the record and select the Settlement Details region.

  12. If you receive a verification of the settlement from the counterparty, check the Settlement Validated check box in the Settlement Details region. Save your work.

Viewing a Summary of FRAs

Use the FRA Transaction Summary window to view a summary of all of your current and settled FRAs.

To view a summary of all FRAs

Viewing FRAs

Use the View Forward Rate Agreements window to view the details for a FRA.

To view a forward rate agreement

  1. In the View Forward Rate Agreements window, query the agreement that you want to view.

  2. If you want to view a summary of all your FRAs, choose the Summary button. The View FRA Transaction Summary window appears.

Interest Rate Swaps

An interest rate swap is an agreement to swap interest rate exposures from floating to fixed or from fixed to floating.

You can enter into either nominal or physical swaps. A nominal swap is where only the interest cash flows are exchanged. A physical swap is where both principal and interest amounts are exchanged.

You can automatically reset the floating rates in your interest rate swap deals by setting a benchmark rate and a margin and then running the Reset Floating (Benchmarked) Rates program. For more information on the Reset Floating (Benchmarked) Rates program, see: Reset Floating (Benchmarked) Rates.

Entering Interest Rate Swaps

Use the Interest Rate Swaps window to enter the paying and the receiving sides of your interest rate swap deals.

To enter an interest rate swap

  1. Navigate to the Interest Rate Swaps window.

  2. Enter a unique reference to identify the swap in the Swap Reference field.

  3. In the Company and Counterparty fields, select a company and counterparty for the swap.

  4. Select a portfolio for the swap in the Portfolio field.

  5. If you want to apply a limit to the swap, in the Limit field, select a limit.

  6. In the Product Type field, select a product type for the swap.

  7. If you want to link the swap to another deal or group of deals, in the Link Code field, select a deal group.

  8. In the Start Date and the Maturity Date fields, enter a start date and maturity date respectively.

  9. In the Pricing Model field, choose the pricing model that you want to use to value the deal. The pricing model chosen will override the default pricing model for the deal type and company.

  10. In the Market Data Set field, choose the market data set that you want to use to value the deal. The market data set chosen will override the default market data sets for the deal type and company.

  11. If the principals of the interest rate deals are being physically swapped, check the Principal Cashflows check box.

  12. Choose the Swap Details button. The Swap Details window appears. This window contains a region for the paying and the receiving side of the swap.

  13. In the Paying Details tabbed region, enter the details about the paying side of the swap as follows:

  14. In the Receiving Details tabbed region, repeat step 13 and enter the details for the receiving side of the swap.

  15. Complete the Additional Details tabbed region.

  16. Save your work.

  17. Choose the Paying Details button.

    The Paying Transaction Details window appears.

  18. In the Interest Amount field, the total amount of interest for the paying side of the swap appears. You can override this calculated interest amount by entering a new interest amount. The System Interest field shows the interest amount calculated by the system.

    Note: You can only override interest amounts if you have the appropriate user access levels. See: User Access Levels.

  19. In the Interest Due On field, Treasury populates the settlement due date. You can update the populated date, if necessary.

    This date is used as the journal date of the interest payment.

  20. Choose the Receiving Details button.

    The Receiving Details window appears.

  21. In the Interest Amount field, the total amount of interest for the receiving side of the swap appears. You can override this calculated interest amount by entering a new interest amount. The System Interest field shows the interest amount calculated by the system.

    Note: You can only override interest amounts if you have the appropriate user access levels. See: User Access Levels.

  22. In the Interest Due On field, Treasury populates the settlement due date. You can update the populated date, if necessary.

    This date is used as the journal date of the interest payment.

  23. Save your work. Treasury notifies you if you have exceeded any limits and applies the swap.

Viewing Interest Rate Swap Payment Transactions

Use the Paying Transaction Details window to view the details of the payment transactions in an interest rate swap deal.

To view the payment transactions for an interest rate swap

Viewing Interest Rate Swap Receipt Transactions

Use the Receiving Transaction Details window to view the details of the receipt transactions in an interest rate swap deal.

To view the receipt transactions for an interest rate swap

Viewing Interest Rate Swaps

Use the View Interest Rate Swaps window to view the details of an interest rate swap deal.

To view an interest rate swap

  1. In the View Interest Rate Swaps window, query the swap that you want to view.

  2. If you want to view the paying and receiving sides of the swap, choose the Swap Details button. The View Swap Details window appears.

  3. If you want to view the transaction details for the paying side of the swap, in the View Swap Details window, choose the Paying Details button. The View Paying Transaction Details window appears.

  4. If you want to view the transaction details for the receiving side of the swap, in the View Swap Details window, choose the Receiving Details button. The View Receiving Details window appears.

Options

An option accords the right, but not the obligation, to buy or sell a specific amount of an instrument at a specified price and within a predetermined time period.

You can create put and call options for bonds, interest rates, and interest rate swaps. You can also create foreign exchange options. For more information on foreign exchange options, see: Foreign Exchange Options.

You can only exercise an option if it is profitable to do so. You must also exercise an option while it is still active. You can only exercise American options when the current date is later than the option start date and earlier than or equal to the expiration date. You can only exercise European options when the current date is equal to the expiration date.

To revalue an 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.

This section describes how you can enter, exercise, and review your options.

Bond Options

A bond option accords you the right to buy or sell a bond at a specific price over a specified time period.

Entering Bond Options

Before you enter a bond option, you must pre-approve the bond that underlies the option.

Prerequisite

To enter a bond option

  1. In the Company and Counterparty fields of the Bond Options window, select a company and counterparty for the deal.

  2. If you are acting as a broker for a client, in the Client field select the client.

  3. In the Portfolio field, select a portfolio for the option.

  4. If you want to apply a limit to the deal, in the Limit field choose a limit for the deal.

  5. In the [ ] Descriptive Flexfield, complete the descriptive flexfield information as required. For more information on descriptive flexfields, see: Oracle E-Business Suite Flexfields Guide.

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

  7. If the option is a European style option, in the Expiration Date field enter the expiration date for the option. If it is an American style option, in the Start Date and Expiration Date fields, enter both a start date and an expiration date for the option. The Option Style field is automatically populated with the appropriate option style.

  8. In the Strike Price field, enter the price at which the parties agree to either buy or sell the bond.

  9. In the Bond Issues field, select the bond being optioned. The pre-approved bond information automatically appears in the Bond Product Type, Physical Start Date, Maturity Date, Coupon Rate, and Coupon Status fields.

  10. In the Face Value field, enter the face value of the bond.

  11. In the Next Coupon Date field, enter the next coupon date for the bond.

  12. In the Amount field in the Premium Details region, enter the amount of the bond premium.

  13. Complete the fields in the Premium Details and Additional Details regions as needed.

  14. Save your work.

Exercising Bond Options

Use the Settlement Details window to exercise a bond option. When you exercise an option you can take a cash settlement or rollover your settlement into another bond.

To exercise a bond option

  1. In the Bond Options window, query the bond option that you want to exercise.

  2. Choose the Exercise button. The Settlement Details window appears.

  3. Enter the date you want to exercise the bond.

  4. Enter the rate at which the parties agree to exercise the option.

  5. Enter the amount of the bond.

  6. If you want to roll over your settlement into another bond, check the Create Bond check box.

    The Fixed Income Securities window appears with the complete details for the new bond option.

  7. If you want to take your settlement in cash, select the company account that you want to receive the settlement.

  8. Save your work.

  9. If you want to view the exercise details for the bond option, in the Bond Options window, query the record and select the Exercise region of the window.

Viewing a Summary of Bond Options

Use the Transaction Summary window to view a summary of your current and exercised bond options.

To view a summary of bond options

Viewing Bond Options

Use the View Bond Options window to view the details for a bond option deal.

To view a bond option

  1. In the View Bond Options window, query the option that you want to view.

  2. If you want to view a summary of your current and exercised bond options, choose the Summary button. The View Transaction Summary window appears.

Interest Rate Options

An interest rate option allows you to receive a specific interest rate on a specific type of financial instrument over a specified time period.

Entering Interest Rate Options

Use the Interest Rate Options window to enter your interest rate option deals.

To enter an interest rate option

  1. In the Company and Counterparty fields of the Interest Rate Options window, select a company and counterparty for the option.

  2. If you are acting as a broker for a client, in the Dealer field select the client you are acting as a dealer for.

  3. In the Portfolio field, select a portfolio for the option.

  4. If you want to apply a limit to this option, in the Limit field select a limit.

  5. In the [ ] Descriptive Flexfield, complete the descriptive flexfield information as required. For more information on descriptive flexfields, see: Oracle E-Business Suite Flexfields Guide.

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

  7. In the Currency field, select a currency for the option.

  8. In the Option Amount field, enter an amount for the option.

  9. In the Expiration date field, enter an expiration date for the option. If you are entering an American style option, in the Start Date field, you must also enter a start date for the option. The Option Style field is automatically populated, with European or American, based on the dates you enter.

  10. In the Physical Start Date field, enter a date on which you want interest to begin to accrue. For European options, the physical start date is the same as the expiration date.

    Note: You can change the physical start date when you exercise the option. If you change the physical start date, the settlement will be discounted to the date you actually received the settlement.

  11. In the Maturity Date field, enter a maturity date for the option.

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

  13. In the Day Count Basis field, choose a day count basis for the deal. The day count basis determines the number of days per year used to calculate interest on the deal. The possible day count bases are: actual/actual, actual/360, actual/365, 30/360, 30E/360, 30E+/360. For more information on how each day count basis is calculated, see: Treasury Terms.

  14. In the Amount field of the Premium Details region, enter the amount of the option premium. Then, in the Company Account field, select the account to which you want to direct the premium.

  15. Complete the fields in the Premium Details and Additional Details tabbed regions as needed.

  16. Save your work.

Exercising Interest Rate Options

Use the Exercise Details window to exercise your interest rate options.

To exercise an interest rate option

  1. In the Interest Rate Options window, query the interest rate option that you want to exercise.

  2. Choose the Exercise button. The Exercise Details window appears.

  3. In the Settlement Rate field, enter the rate at which you exercise the option.

  4. Enter the date on which you exercise the option.

  5. Save your work. You return to the Interest Rate Options window.

  6. If you want to view the exercise details for the interest rate option, in the Interest Rate Options window query the record and select the Exercise region of the window.

Viewing a Summary of Interest Rate Options

Use the Premium/Settlement Details window to view a list of all of your interest rate options.

To view a summary of interest rate options

Viewing Interest Rate Options

Use the View Interest Rate Options window to view the details of an interest rate option.

To view an interest rate option

  1. In the View Interest Rate Options window, query the option that you want to view.

  2. If you want to view a summary of your interest rate options, choose the Summary button. The View Premium/Settlement Details window appears.

Interest Rate Swaptions

An interest rate swaption is an option for two parties to swap interest rates.

When you exercise a swaption you can settle in cash or enter into another swap agreement.

Entering Interest Rate Swaptions

Use the Interest Rate Swaptions window to enter your interest rate swaption deals.

To enter a swaption

  1. In the Company and Counterparty fields in the Interest Rate Swaptions window, select a company and counterparty for the swaption.

  2. In the Portfolio field, select a portfolio for the swaption.

  3. If you want to apply a limit to the swaption, in the Limit field select a limit.

  4. If you are acting as a broker for a client, in the Client field select the client you are acting as a broker for.

  5. In the [ ] Descriptive Flexfield, complete the descriptive flexfield information as required. For more information on descriptive flexfields, see: Oracle E-Business Suite Flexfields Guide.

  6. In the Deal Subtype and Product Type fields of the Main Details region, select the deal subtype and product type for the swaption. When you select the deal subtype, you determine which part of the swap is fixed rate.

  7. In the Swap Curr Fixed Leg field, select the currency for the fixed leg of the swaption.

  8. In the Face Amount field, enter the face amount of the swaption.

  9. In the Expiration Date field, enter a expiration date for the swaption. If this is an American style swaption, enter a start date and an expiration date for the swaption. The Option Style field is automatically populated, with European or American, based on the dates you entered.

  10. In the Physical Start Date field, enter a start date.

  11. In the Maturity Date field, enter a maturity date.

  12. In the Fixed Rate field, enter the fixed rate for the swaption.

  13. In the Day Count Basis field, enter the day count basis for the deal. The day count basis determines the number of days per year used to calculate interest on the deal. The possible day count bases are: actual/actual, actual/360, actual/365, 30/360, 30E/360, 30E+/360. For more information on how each day count basis is calculated, see: Treasury Terms.

  14. In the Interest Freq field, enter the length of each interest accrual period in months.

  15. In the Action field, indicate whether you pay or receive the interest in the option by selecting either Pay or Rec.

  16. Complete the fields in the Premium Details and Additional Details tabbed regions as needed.

  17. Save your work.

Exercising Interest Rate Swaptions

Use the Exercise Details window to exercise your interest rate swaptions.

To exercise an interest rate swaption

  1. In the Interest Rate Swaptions window, query the swaption that you want to exercise.

  2. Choose the Exercise button. The Exercise Details window appears.

  3. In the Settlement Rate field, enter the rate at which you exercised the swaption.

  4. Enter the exercise date for the swap.

  5. Enter the amount for the swap.

  6. If you want to roll over your option into another swap, check the Create Swap check box. The Interest Rate Swaptions window appears and contains the default data for the swap you are exercising. Enter the new settlement date for the swaption and save your work. The reference number for the swaption appears in the Swap Ref field in the Exercise Details window.

  7. Save your work. You return to the Interest Rate Swaptions window.

  8. If you want to view the exercise details for the interest rate swaption, in the Interest Rate Swaptions window query the record, and select the Exercise region of the window.

Viewing Interest Rate Swaptions

Use the View Interest Rate Swaptions window to view the details for an interest rate swaption deal.

To view an interest rate swaption