Maintaining Deals

This chapter provides an overview of administering deals, provides the prerequisite tasks, and discusses how to:

• Sell or buy back a deal.

• Repurchase an IRP deal.

• Roll a deal forward.

• Process reset rates.

• Process mature deals.

• Deactivate deals.

• Monitor facilities.

Understanding Deals Maintenance

Once you have processed deals and grouped them into portfolios, you can perform administrative tasks to maintain them, such as:

• Selling or buying back a deal.

  This functionality enables you to sell or buy back individual deals. For example, if you purchase an active deal, and need to sell it during some point in its lifecycle. Or you enter into deals as debt instruments, and are now calling in that debt.

• Repurchasing an IRP deal (a repo).

  This functionality enables you to repurchase deals and establish collateral for the repo agreement.

  For an investor, a repo involves the purchase of a security with an agreement to sell it back to the initial seller at a future date. These all involve IRP instruments (typically US Treasury, Agency, or CMO). The seller typically continues to receive all interest and principal payments and the purchaser typically receives a fixed rate on the cash he purchased the repo with.

  A Reverse Repurchase Agreement (or "reverse repo") is basically the opposite side of the repo. A holder of securities raises short term cash by a sale of the securities with the promise to buy it back. Sometimes the seller does a reverse repo of a security held with one party and uses the cash to do a repo for a security not held with a second party. The difference in rates make may make this worthwhile, as rates are often determined by the quality of the underlying instruments.

• Rolling forward an IRP deal.

  This functionality enables you to "rollover" IRP deals by establishing new date and monetary parameters for the deal. Roll overs again only involve IRP instruments. Using the repo example, often repo transactions involve an "open repo" which is an overnight repo (although the term can actually be longer than overnight) that rolls over automatically until terminated.

• Resetting deal rates.

  You need to reset rates according to the daily trading. This process updates information for interest rate physical and interest rate swap base types. You can also schedule this process to run for a specified date.

• Verifying deal maturity.

  You need to verify the maturity dates of deals. This process reviews all active deals, determines whether or not they have reached their maturity date, and changes the status of deals that have reached their maturity date.

• Deactivating (or "undoing") deals.

  You need to deactivate a previously active deal. This process deactivates most deal events on previously active deal—even if money has been received for the deal—but any accounting entries created for the deal must be manually adjusted.

Deals Maintenance Workflows

If you have implemented the Facility Review workflow, when you run the Monitor Expiring Facilities process (TR_FCLTY_RVW), the system automatically routes expiring facilities associated with deals to a defined user (or users) worklist.

See Also

Monitoring Facilities for Deals

Deals Maintenance Workflows

Prerequisites

Prior to performing deal administration tasks, you must create, process, and confirm deals.

See Also

Capturing Deals and Trade Tickets

Processing and Managing Deals

Confirming Deals

Selling or Buying Back a Deal

This section discusses selling or buying back a deal.

Use the Deal Management Sell/Buyback functionality with all deal types to sell or buyback a deal. You can use this feature to:

• Sell a purchased investment at a point in its life cycle.

• Split an existing deal into one or more new deals.

• Call back a debt.

Page Used to Sell or Buy Back a Deal

Entering Sell/Buyback Deal Details

Access the Update/Display Sell/Buyback Details page (Deal Management, Capture Deals, Deals, Deal Detail. Click Sell/Buyback on the Deal Detail page).

The Sell/buyback link appears on the Details page after the deal is saved. The link remains visible as long as the deal is open. You cannot use the Sell/Buyback functionality with option or binary option deals.

To view this page, the Trade Type drop-down list box on the Trade Detail page must have a value of Closed. Otherwise, the Sell/Buyback link is not displayed.

See Entering Trade Detail Information.

Note. Some of the fields on the Update/Display Sell / Buyback Details page are not displayed for non physical deals.

Transaction Dates

Unwind Settlement

(Sale Pro Rata % / 100) x (Unwind Princp. Bal. + Unamort. Fee Amt + Unamort. Disc. Prem)

Repurchasing an IRP Deal

This section discusses repurchasing an interest rate physical deal.

Page Used to Repurchase an IRP Deal

Recording IRP Repurchase Agreement Details

Access the Repurchase Agreements Details page (Deal Management, Capture Deals, Deals, Deal Details. Click Repo Details on the Deal Details page).

Note. This page is accessible only if the Is a Repo check box is selected on the Instrument Detail page.

Rolling an IRP Deal Forward

This section discusses modifying term and monetary parameters for an interest rate physical deal to "roll it forward."

Page Used to Roll a Deal Forward

Entering IRP - Rollover Details

Access the Roll Specific Details - Interest Rate Physical page (Deal Management, Capture Deals, Deals, Deal Detail. Click Rollover).

Modify (+ or -) Principal	Enter a negative or positive amount to modify the original principal amount.
Allocate Interest	Indicate how the system manages the original principal and current interest amounts for the rolled forward deal. Select from the following options: Accrue: Select to roll forward the roll principal amount. The interest amount is not rolled forward. Instead, the system uses the maturity date of the rolled forward deal as the interest payable due date. Compound: Select to roll forward the roll principal and the interest amounts. The system adds the original principal and current interest amounts to calculate a new principal total. Pay: Select to roll forward only the roll principal amount. The interest amount is not rolled forward. Instead, the system uses the maturity date of the original deal as the interest payable due date. Note. Available field values change depending on the deal interest settings. If the deal is defined to pay interest at maturity, you can select from all three options. If the deal is defined to pay interest in multiple coupon periods, you can only select the Pay option.
(+) Interest Compounded (plus interest compounded)	Displays the accrued interest amount added to the principal amount.
(-) Interest Compounded (minus interest compounded)	Displays the accrued interest amount subtracted from the principal amount.
Roll Principal	Displays the total of the Original and Modify (+ or -) Principal fields. This is the initial principal amount for the new rolled forward deal.
Roll Interest	Displays the amount of accrued interest rolled into the new deal.
Interest Due	Displays the interest amount due for the new deal.

Processing Reset Rates

This section discusses how to reset rates automatically.

Page Used to Process Reset Rates

Resetting Rates Automatically

Access the Automated Rate Resets page (Deal Management, Process Deals, Automated Rate Resets, Automated Rate Resets).

Reset Rate Index	Enter a reset index for this range of instruments, for example, LIBOR (London Interbank Offer Rate).
Rate Type	Select the type of rate that, combined with the market rate index, determines the price of the delivered contracts.

For the rate to be reset for any deal on a specified date, the rate index and rate type entered here must match the rate index and rate type of the original deal. The deal and subsequent cash flows are updated with the new rate for that date. The updated rate can also be viewed on the Interest and Payment Dates page. If necessary, the rate populated by the automated process can be overwritten on the Interest and Payment dates page.

Processing Mature Deals

Run the Mature Deals process (TR_MATURE) to identify all active deals that have reached their maturity date, and change the deal status to "Mature." For multiline deals, except options and futures, the deal is marked mature only if all the lines in the deal are past their maturity date.

Page Used to Process Mature Deals

Process Mature Deals

Access the Mature Deals page (Deal Management, Process Deals, Mature Deals, Mature Deals).

Use the Process Scheduler to establish the date, time, and frequency for processing the validation check for mature deals.

Note. Schedule the TR_MATURE process from the Process Scheduler using a Run Recurrence frequency of Daily.

Deactivating Deals

This section discusses how to deactivate deals and run the Accounting Entries for the Undone Deals report.

Understanding Deal Deactivation

You can use the Undo Deals Utility Application Engine process (TR_UNDO_DEAL) to undo deal events on a previously active deal, even if money has been received for the deal. The Deal Undo Utility process only deactivates processed deals. As deal deactivation is not reversible, only users with user IDs authorized to undo deals can perform this function.

Note. As the process does not automatically "reverse" associated accounting entries, any accounting entries processed for deal need to be reversed manually on the Accounting Entries page.

The Deal Undo Utility process does the following:

• Sets the status flag of cashflow, position, and accounting events to "deactivate" on the Transaction Position (TRX_POSITION_TR) and Cash Flow (CASH_FLOW_TR) tables.

• Automatically generates a report listing deactivated deals for the specified business unit. In addition, the report lists the affected accounting entries that require manual adjustment.

See Also

Capturing Deals and Trade Tickets

Adjusting Accounting Entries

Prerequisites

Before you use the Undo Deals Utility, you must do the following:

• Install the Undo Deals Utility during implementation.

• Establish permission for your user ID for deal deactivation.

See Also

Setting Up Application-Specific Installation Options

Securing Your System

Page Used to Deactivate Deals

Deactivating Deals

Access the Undo Deal Utility page (Deal Management, Process Deals, Undo Deal, Undo Deal Utility).

Only users with user IDs authorized to undo deals can access the Undo Deals Utility. Prior to deal deactivation, you must reconfirm your user ID and password.