Understanding Common PeopleSoft Financial Services Industry Processes

This chapter discusses the following topics:

• Financial Performance Measures process.

• Basic processes.

• Additional processes.

• Primary tables.

• Tables accessed and tables updated.

Financial Performance Measures Process

One of the primary business processes for PeopleSoft Risk Weighted Capital and PeopleSoft Funds Transfer Pricing is the Financial Performance Measures process (FPM). Running this process enables the financial rules and calculations to be processed so that PeopleSoft Risk Weighted Capital and PeopleSoft Funds Transfer Pricing can use this data. There is a specific sequence in which the FPM process uses the Stratification engine (FI_SE) and Cash Flow Generator (FI_CASHFLOW) to process and retrieve additional data.

All business processes are invoked using a jobstream. The following lists the basic process flow:

1. The FPM jobstream allows you to invoke the Stratification engine for aggregating instruments into pools.

2. The FPM process instructs the Cash Flow Generator to calculate the expected future cash flows for the instruments in the pool and to calculate the financial measures for the pool.

3. The FPM process makes an online call to the Yield Curve Generator process for any products or instruments needing an interest rate during processing.

   The Pricing Index Model generates the interest rates and pricing indices for the cash flows scheduled based on the interest rate reprice dates.

4. The behavioral models calculate the effects on cash flows resulting from such events as prepayments, exercised rate lock options, and charge-offs.

5. The Curve Evaluator generates discount rates for cash flows.

   It also creates a cash flow schedule based on the interest payment schedule and interest rate reprice schedule created in the Product Definitions module.

6. The Cash Flow Generator accesses the beginning principal balance for each payment period from the Instrument Balance table (FI_IBAL_R00) or from the Instrument Pool Balance table (FI_POOLBAL_R00).

Using all these engines, the FPM process is able to calculate financial measures, such as net present value, convexity, measures of duration, interpolation of interest rates, cash flows, calculation of net interest margin, and reconciliation of ledger account balances to their corresponding instrument or treasury position balances.

For added flexibility, you also have the option to run the Stratification application engine and Cash Flow Generator application engine separately. Run the Stratification application engine to aggregate instrument data into pool tables. You can then run the Cash Flow Generator application engine separately, using as input the instrument pools aggregated by the stratification application engine. Or, run the Cash Flow Generator application engine and the FPM process without prior stratification of instrument data into pools.

Note. The Cash Flow Generator can project cash flows both for instruments currently in the portfolio, as well as instruments forecasted to be originated at some future date. Cash flow calculations for non-forecasted data are based on data available in the FI_INSTR_F00 table and its child tables. Cash flow calculations for forecasted data are based on the rules from the Financial Products page. These describe the cash flow characteristics of the instruments, including type of balance, par amount, term, interest calculations, and interest dates.

This diagram illustrates the basic FPM process flow:

Basic FPM process flow

Basic Processes

The following table lists the basic business processes and their associated jobstreams.

Now, you've set up all of the relevant pages for stratifying your data. Next, run the Stratification application engine to generate the instrument pools and aggregate individual instrument data into these pools. Do this by running a jobstream that includes the Stratification application engine in its processing, such as the FPM process or by running the Stratification application engine separately.

After you stratify your instrument data into pools, FSI application engines and the PeopleSoft Financial Services Industry applications then use these instrument pools:

• The Cash Flow Generator uses these instrument pools to efficiently process large volumes of instrument data.

• PeopleSoft Funds Transfer Pricing uses these pools to set up funds transfer pricing rates for a group of instruments.

  If stratification is requested, PeopleSoft Funds Transfer Pricing calls the Stratification application engine when the funds transfer pricing rate is based upon the results of the Cash Flow Generator, duration, average life, or strip funding.

• PeopleSoft Risk-Weighted Capital uses these instrument pools when calculating normalized loss or risk-weighted capital allocations for a group of instruments.

Note. The jobstreams listed are for the sample data PeopleSoft delivers. You can create your own jobstreams.

Additional Processes

In addition to the basic business processes, there are two other processes that you will use:

• Currency Conversion application engine (to convert currencies).

• Audit Utility (to audit your setup).

Currency Conversion Engine

Data is migrated into PeopleSoft EPM Warehouse from various sources, with amounts denominated in different currencies. Prior to running your PeopleSoft Enterprise Financial Services Industry applications, you may want to use the Currency Conversion application engine to convert currency amounts in the data warehouse tables from/to base currency amounts to/from transaction amounts. These conversions can occur at any time, using user-defined conversion parameters.

There are three points at which you may need to run the Currency Conversion application engine:

• Prior to running PeopleSoft Enterprise Financial Services Industry applications in the instrument tables (FI_INSTR_F00, FI_IBAL_R00, and FI_ISTATUS), where the applications access their balance amounts for processing.

• After running PeopleSoft Enterprise Financial Services Industry applications in the PF (performance) Journal table (PF_JRNL), which is the central point through which all PeopleSoft Financial Services Industry application output data must pass to get to the PF Ledger table.

  This converts:

  • Break fund fixed charges in base currencies, needing conversion to transaction currencies (in the FI_IBFCHRG_R00 table).

  • Break fund economic loss calculations that are in transaction currencies only, because they are based on cash flows that use transaction currencies. These need to be converted to the base currencies (in the FI_IBFCHRG_R00 table).

  • Fixed funds transfer pricing adjustments in base amounts only, needing conversion to transaction currencies (in the FTP_CALC_IN_F00, FTP_CALC_AC_F00, and FTP_CALC_PS_F00 tables).

• When you run PeopleSoft Funds Transfer Pricing on forecasted pools, conversion may need to occur after running the Portfolio Forecast application engine, which populates the FI_POOLBAL_R00 table with pool amounts stated in transaction currency, if the forecast which generated the pools was currency-specific.

Audit Utility

The Audit Utility identifies metadata errors in the PeopleSoft Enterprise Financial Services Industry environment and applications. The Audit Utility does not need to be set up in a jobstream and can be run at any time. Any problems identified by the Audit Utility may require assistance from a software developer or data warehouse administrator. The information provided typically helps a systems person resolve issues.

You can run the Audit Utility for any or all PeopleSoft Enterprise Financial Services Industry applications. For each of your selections, the Audit Utility checks that there are no problems with the business rules.

See Auditing PeopleSoft EPM Objects.

Primary Tables

The PeopleSoft Financial Services Industry environment has several primary tables that it uses for processing and storing data for the PeopleSoft Financial Services Industry environment and applications. These tables store historical data, including closed contracts (that is, instruments with a zero balance). The historical data is used for reporting, as well as forecasting purposes.

Some of the tables are required (indicated below with an asterisk). Others are optional and used for reporting purposes or for building user-defined constraints, which can be used throughout PeopleSoft Financial Services Industry applications when defining business rules and processes performed on subsets of data.

See Also

Additional tables used by the specific FSI applications in:

Understanding Risk-Weighted Capital

Tables Accessed and Tables Updated

This section discusses the tables that are accessed and updated by these processes:

• Cash Flow Modeler

• FPM

• Yield Curve Generator

• NIM Report (Net Interest Margin)

• Stratification

• Stratification Report Pools

• Portfolio Forecast

• Balance Sheet Reconciliation

• Instrument Reconciliation

• Instrument Posting

• Instrument Unpost

• Instrument Batch Deletion

Cash Flow Modeler

Use the Cash Flow Modeler process to model cash flows interactively for an instrument or product, to explore assumptions affecting cash flows, such as the rate environment, terms, and payment characteristics of the instrument, and the effects of the behavioral model.

Financial Performance Measures

The Financial Performance Measures application engine (FI_FPM) initiates the FPM process. This process calculates financial measures for instruments based on the financial calculation rules. It also:

• Uses the Stratification application engine and Cash Flow Generator.

• Groups instruments by balance sheet rules, pricing constraints, and behavioral model constraints.

• Summarizes instruments into two instrument pools.

• Calculates financial measures on instrument pools.

• Assigns measures to instruments.

Yield Curve Generator

The Yield Curve Generator application engine (YC_GENERATOR) initiates the Yield Curve Generator process. This process calculates yield curves based on the definitions that you've specified.

NIM Report

The FI_NIM Net Interest Margin application engine (FI_NIM) initiates the Net Interest Margin (NIM) process. This process calculates the net interest margin or the difference between interest revenue and cost of funds for instruments. This process also:

• Calculates interest income for instrument pools.

• Calculates the count and amount of new balances.

• Summarizes information by balance sheet rule and dimension.

Stratification

The Stratification application engine (FI_SE) initiates the Stratification process. This process aggregates instrument data into pool tables. You can then run the Cash Flow Generator separately. Use the instrument pools aggregated by the stratification application engine as input.

Stratification Report Pools

The FI REPORT application engine initiates the Stratification Report Pools process. This process builds stratification pools for reporting purposes based on user-defined stratification rules.

Portfolio Forecast

The FI_FCSTFTP and FI_FCSTRWC application engines initiate the Portfolio Forecast process. This process updates the forecasts generated by the Forecasting application engines based on existing cash flow output data. It uses forecasted product origination data to create new instrument pools with starting balances. It calls the Cash Flow Generator to create new cash flows for the newly created instrument pools.

Balance Sheet Reconciliation

The Balance Sheet Reconciliation application engine (FI_RCN_BS) initiates the Balance Sheet Reconciliation process. This process reconciles instrument and position balances to their respective ledger balances, based on the hierarchy and relationships defined in the balance sheet rules. This process also summarizes reconciliation amounts by dimension.

Instrument Reconciliation

The Instrument Reconciliation process is initiated by the FI_RECON application engine. This process reconciles instrument balances to their respective ledger balances based on reconciliation rules. You can select the ledger table where the engine should retrieve data. You can aggregate output by several dimensions.

Instrument Posting

The FI_POST application engine initiates the Instrument Posting process. This process reconciles instrument balances to their respective ledger balances based on reconciliation rules. This process also posts data from the FI Journal to the instrument ledger. These tables hold ledger data at the instrument level. Posting occurs based on batch ID.

Instrument Unpost

The FI_UNPOST application engine initiates the Instrument Unpost process. This process unposts data by batch ID from the FI_ILDGR_F00 table. Once unposted, the batch cannot be reposted.

Instrument Batch Deletion

The FI_DELBATCH application engine initiates the Instrument Batch Deletion process. This process deletes data from the FI_IJRNL_F00 table by batch ID. Once a batch has been posted to the FI_ILDGR_F00 table, it cannot be deleted from the FI_IJRNL_F00 table.