Understanding the Deal Capture Process

Specify which set of accounting templates on the Accounting Templates page to use when you are generating accounting events for the deal. You can create additional accounting treatment types by adding or modifying translate values for the TRA_ACTG_TREATMENT field by using PeopleSoft Application Designer.

The Financial Accounting Standards Board (FASB) defines these options:

Available for Sale: Indicates that the deal could be sold before its maturity date.

Held to Maturity: Indicates that the deal will be held until its maturity date.

Loans and Receivables: Indicates that the deal is a loan that is granted by the treasury of the enterprise.

Trading: Indicates that the deal will likely be sold before its maturity date.

Other: Indicates that items do not fall within the previously listed parameters.

See Defining Amortization Functionality for IRP and IR Swap Deals.

For the purposes of calculating interest, a business day convention is used for establishing the beginning and end of interest periods. Values are:

• Following: If the date of interest period begins or ends on a weekend day or a holiday, then the first business day following the date is used.

• Modified Following: The same as Following with the exception that if the date falls at the end of the month, then the last business day of the month is used. For example, if the end of the period falls on a Saturday and it is the end of the month, then the previous Friday is used.

• Previous: If the date of interest period begins or ends on a weekend day or a holiday, then the last business day before the date is used.

• Modified Previous: The same as Previous with the exception that if the previous day falls on the end of the previous calendar month, then the first business day of the current month is used.

Click to view the cash flows that result from this deal on the Cash Flows page (TRX_CASHFLOWS_TR).

This button initially generates cash flows if none exist. After cash flows have been generated, and if the parameters of the deal have not been changed, clicking this button displays the previously generated cash flows.

The display of the Cash Flow button depends upon the instrument type that is selected.

Define at what interval the interest compounds.

Select a day count basis. Values are:

30/360: Assumes that a year consists of 12 months with an equal length of 30 days. A special rule applies when you are dealing with the end of a month.

30E/360: Assumes that a year consists of 12 months with an equal length of 30 days. This is also known as Euro 30/360.

Actual/360: Assumes that a year consists of 360 days, but the months are counted as actual calendar days.

Actual/365: Assumes that a year consists of 365 days, but the months are counted as actual calendar days.

Actual/Actual: Assumes that the number of days between two dates is the actual number of calendar days.

Select to have the system use the actual number of days between interest dates to calculate interest payments. If you select this check box, then select Use Actual Interest Dates or Use Nominal Dates to determine which interest dates to use when calculating interest payments.

If you select Use Nominal Dates, the nominal interest dates (the interest dates before adjusting for nonbusiness days and weekends) determine the amount of the interest payment. If you select Use Actual Interest Dates, the actual interest dates (the interest dates after adjusting for nonbusiness days and weekends) determine the amount of the interest payment.

This field has the default value of Open until you change it. The security level dictates whether you can change this value. Open deal status is the standard for preapproved deals or deals that require approval. Values are:

Deactivated: Indicates an open deal, erroneously entered and canceled.

Forecasted: Indicates a forecasted transaction.

Matured: Indicates a contractual deal past its maturity date.

Open: Indicates an active and open contractual deal. This is the default status for all deals.

Sample: Indicates a sample-only deal; do not use as an actual deal transaction.

Sold / Bought Back: Indicates a deal that is sold to another counterparty or bought back from the counterparty.

Under Negotiation: Indicates a deal that's in the process of being entered or preauthorized.

Partially Sold / Bought Back: Indicates a part of a deal that is sold to another counterparty or bought back from the counterparty.

Click to ensure that this deal meets the conditions that are specified on the Deal Conditions page. If the deal meets the specified conditions, a message states that the deal passed checks. If not, the Deal Checking page (POS_LMT_CHK_MSG) displays the conditions that were not met. You can use this function only if a deal exists in a position tree to use this function. A deal exists in a tree if you select the Deal Must Exist as a Leaf check box in the Tree Wide Options page.

See Specifying IRP Deal Details.

For a single-line instrument or for futures, if the Description field is blank, the system supplies the description when you save the deal. Leave the Description field blank, enter all deal specifics, save the deal, and then edit the system-generated description according to your requirements.

Select to exclude this deal from position analysis. Use this as a flag when you set up selection criteria in position analysis. When excluding a position from position analysis, you must add a selection condition to the top node of the position tree. For example:

EXCLUDE FROM POSITION Not Equal Y

Click to access the Enter Fees page (FEE_GENERATOR_PNL), where you can enter fees that are associated with a deal. The display of the Fees link depends upon the instrument type that is selected.

See Creating Fee Entries.

You must select a value for this field if you selected the Same Interest for each Period option.

Define the term for the first interest payment. Values are:

• Long First Coupon Period: If, based on the payment scheduling, the first coupon due date arrives before a full payment period has elapsed, the payment is held until the next coupon due date and combined with the payment due for that full period. For example, if the payments are scheduled for the end of each month, and the deal is carried out in the middle of the month, the first coupon is due at the end of the following month, thus creating a long first coupon period of one and a half months.

• Normal First Coupon Period: The coupon period commences on the day that the deal is executed and the first payment is due at the end of one full period.

• Short First Coupon Period: If, based on the payment scheduling, the first coupon due date arrives before a full payment period has elapsed, the initial payment is made regardless. For example, if the payments are scheduled for the end of each month, and the deal is executed in the middle of the month, the first coupon is paid after only a half of a normal coupon period has elapsed.

See .

For interest calculations, the index margin is the value that is added to the reset index, or the value by which the reset index is multiplied. Use the Margin Operator field to specify whether the interest calculation involves adding or multiplying of the index margin value.

The default index margin is defined here on the deal. You can override the default margin for one or more interest periods on the Interest Payments and Dates page for a floating-rate deal.

Displays the instrument type on which the deal is based. This field is a link on the Deal Detail page that accesses the Instrument Detail page. Changes that are made to the instrument type when you are navigating using this link will not be reflected in the current deal. Only deals that are created in the future will reflect any of the changes.

Specify the method to use to calculate interest. Values are:

Discount to Yield: Select for discount securities that are quoted using a money market yield. This method uses the rate to derive the settlement amount. The difference between the settlement amount and the par amount is the interest.

Interest Bearing: Select for interest-bearing instruments. This method calculates interest for each period and pays interest on each period end date.

Straight Discount: Select for money market instruments that are quoted on a straight discount or discount rate basis. This method uses the rate to calculate a discount amount, and then subtracts this amount from the par amount to obtain the purchase price or settlement amount.

Select an interest date rule to use to define how interest is calculated and when payments will be paid. Depending on the values that you select in this list, complete the related fields. Values are:

• No Interest Date Rule: No predefined calculation is used for determining interest.

• Backwards from Maturity Date: Interest is calculated starting from the maturity date backwards toward the issue date. This is used for instruments such as treasury bonds that have a final maturity date after which no further interest is accrued.

• End of Month: Select to indicate that interest payments will be paid at the end of each month. Enter a numeric equivalent in the Coupon Month field for the first month that interest will be paid.

• Forwards from Issue Date: Interest is calculated beginning from the issue date and going forward to the maturity date.

• Nth Weekday: Enter a week and day on which the interest period will end. For example, select Nth Weekday, Third in the Nth Week field, and Friday in the Weekday field to designate that the end of the interest period will always fall on the third Friday of every month.

• Override Month and Day: Select Override Month and Day and enter a month and day to designate when the interest period ends. For example, enter 10 in the Coupon Month field and 23 in the Coupon Day field to indicate that the interest period ends on the 23^rd day of every month beginning with the month of October.

Values are:

• Use Nominal Dates: Determines the amount of the interest payment based on the interest dates before adjusting for nonbusiness days and weekends.

• Use Actual Interest Dates: Determines the amount of the interest payment based on the interest dates after adjusting for nonbusiness days and weekends.

Select an interval that reflects the cash flow frequency for the deal. Values are Annual, At Maturity, Every 28 Days, Every 35 Days, Every 49 Days, Monthly, Quarterly, Semi-Annual, and Weekly. In the Compounds field, define how frequently this interest interval compounds. Values are Annual, At Maturity, Every 28 Days, Every 35 Days, Every 49 Days, Monthly, Quarterly, Semi-Annual, and Weekly.

The Interest Period Start Date and Issue Date fields display the settlement date by default for both investments and debt instruments. In the case of investments, the interest period start date can be changed to a date in the past. The system then calculates the purchased interest.

Click to access the Show Treasury Instrument Notes page (INSTR_NOTES_SHOW), where you can review notes about the underlying instrument of the deal. This text field is for reference only; you cannot modify the notes.

You must select a value for this field if you selected the Same Interest for each Period option.

Define the term for the last interest payment. Values are:

• Long Last Coupon Period: If, based on the payment scheduling, the maturity date arrives before a full payment period has elapsed, the final full coupon period is combined with the remaining partial period. For example, if the payments are scheduled for the end of each month, and the deal matures in the middle of a month, a long-last coupon period of one and a half months is created.

• Normal Last Coupon Period: The coupon period commences on the day that the deal is completed and the first payment is due at the end of one full period.

• Short Last Coupon Period: If, based on the payment scheduling, the deal maturity date arrives before a full payment period has elapsed, the final payment is made based on the length of the partial period. For example, if the payments are scheduled for the end of each month, and the deal matures in the middle of the month, the last coupon is paid after only a half of a normal coupon period has elapsed.

Select the operation, add or multiply, by which the rate per the reset index is acted upon by the index margin to calculate the adjusted rate.

The date on which your deal matures or ends. Enter a date or have the system calculate a maturity date based on the issue date and term that is entered.

Select if your instrument has more than one instrument base type or contains an interest rate swap, and you require that cash flow from one instrument base type or swap leg net with cash flow from another instrument base type or swap leg.

Select from the following options and enter a value in the +/- Payment Days field:

• Business Days - Paid in Advance: The system calculates a payment for a specified number of days before the interest period start date, excluding days that are specified as nonbusiness days in the PeopleSoft calendar functionality. For example, if you specify Saturday and Sunday as nonbusiness days, the system does not include these days and uses a normal business week (Monday through Friday) to calculate the payment date.

• Business Days - Paid in Arrears: The system calculates a payment for a specified number of days after the interest period end date, excluding days that are specified as nonbusiness days in the PeopleSoft calendar functionality.

• Calendar Days - Paid in Advance: The system calculates a payment for a specified number of days before the interest period start date, and includes all days, both business and nonbusiness days. For example, if you specify Saturday and Sunday as nonbusiness days, the system includes these days in calculating the payment date.

• Calendar Days - Paid in Arrears: The system calculates a payment for a specified number of days after the interest period end date, and includes all days, both business and nonbusiness days.

Click to access the Pool Information page for details regarding the investment pool that is the source of funds that are used to finance the deal.

Select the portfolio that categorizes the deal.

Enter the interest rate for the deal.

Select whether the interest rate for this instrument is fixed or floating. If you select Fixed, enter the rate. If you select Floating, enter the reset index for the floating rate.

If the trade is assigned any unique reference numbers by the counterparty, you can record them in this field.

This check box is automatically selected if the interest rate physical or interest rate swap transaction has multiple interest cash flows. This is defined at the instrument type level.

Select from the following values and enter a value in the +/- Reset Days field:

Set in Arrears: Indicates that the reset date equates to the interest date that marks the end of the interest period.

Set in Advance: Indicates that the reset date equates to the interest date that marks the beginning of the interest period.

Specify the reset parameter for the interest calculation. Field values ending in the suffix - Comp indicate the interest compounds (per the field value time period). Select from Annual, At Maturity, Daily, Every 28 Days, Every 35 Days, Every 49 Days, Monthly, Quarterly, Semi-Annual, Weekly, or the appropriate - Comp value.

Select a reset index for this instrument, for example, LIBOR. (London Interbank Offer Rate).

Click to reserve headroom for this deal below the ceiling for the limit. This button is available only when the deal status is Under Negotiation. Use the button to ensure that deals under negotiation have enough headroom reserved within the defined position limits. You must enter detail data on the Deal Detail page before using this feature. You can click the UnReserve button to reverse any limits that are established for deals that are under negotiation.

Select to have the system use a fixed amount to calculate interest payments, regardless of the number of days between interest dates.

For IR Swap deals, if you select this value and the leg is a fixed-rate leg, the second list is replaced by two drop-down list boxes that enable odd (broken) first and last coupon periods to be handled. Select Normal First Coupon Period, Short First Coupon Period, or Long First Coupon Period in the first drop-down list box. Select Normal Last Coupon Period, Short Last Coupon Period, or Long Last Coupon Period in the second drop-down list box.

Enter the security ID that was assigned when you defined the security using the Security Header page.

See Defining Securities.

A treasury organization can gauge the feasibility of hypothetical deals and ensure that limits exist for deals that are planned for the near future. When you enter provisional deals, select this check box and select Under Negotiation from the Deal Status drop-down list box on the Deal Detail page. When you save a deal, Pending Review is the default value as the deal status type, and the Workflow feature routes the deal to the designated manager for review.

Displays the number of days between the settlement or commencement date and maturity date on the Deal Detail page. The value is calculated by the system.

If you enter a term value, then the system calculates the maturity date by adding the term to the commencement or settlement date.

Click to test whether a deal falls within established position limits.

See Understanding Limit Checked Workflow.

See .