10. Annexure A - Accounting Entries and Advices for the MM Module

10.1 Accounting entries for Money Market

This section contains details of the suggested accounting entries that can be set up, for the MM module of Oracle FLEXCUBE. The details of the suggested accounting entries are listed event-wise.

10.2 MM Events

The following is an exhaustive list of events that can take place during the lifecycle of an MM contract. In the subsequent paragraphs we shall examine the accounting entries and advices for each of the events listed below.

Sl No Event Code Event Description Remarks
1 BOOK Booking a contract (Mandatory) All Types
2 INIT Takedown or Initiation (Mandatory) All Types
3 ACCR Accrual (Mandatory for products with interest pay­ment frequency) All Types
4 LIQD Liquidation (Mandatory) All Types
5 CONF Confirmation of contract All Types
6 CAMD Amendment All Types
7 ROLL Rollover execution (treated as a liquidation + new booking) All Types
8 REVC Reversal (Mandatory) All Types
9 REAS Reassign User All Types
10 RESD Reversal of Residual Accrual All Types
11 REVC Contract Reversal All Types
12 REVN Rate Revision All Types
13 REVP Reversal of Payment All Types
14 STCH Status Change Place­ments
15 VAMB Value Dated Amendment Booking All Types
16 VAMI Value Dated Amendment Initiation All Types
17 AFRM Affirmation of a deal  
18 UAFR Unaffirm a deal  
19 CNWV Confirmation Waiver  
20 UCNW Unmarking of confirmation waiver  

10.3 Amount Tags

The amount tags listed below are hard-coded in Oracle FLEXCUBE.

Amount Tag Description
PRINCIPAL Principal Amount
PRINCIPAL_DECR Decrease in principal on amendment
PRINCIPAL_FWD Forward takedown amount
PRINCIPAL_INCR Increase in principal on amendment
PRINCIPAL_LIQD Principal Amount Liquidated
PRINCIPAL_ROLL Principal Amount Rolled over
PRINCPAL_XFWD Principal Amount Reclassified
PRINCPAL_XREV Principal Amount Unclassified
ROLLOVER_AMT Rollover Amount
component_LIQD_CY Current year Unrealized accrual amount for a com­ponent
component_LIQD_PY Previous year Unrealized accrual amount for a com­ponent.
<INTEREST_COM­PONET>_ROLL The outstanding interest will be stored in a bridge account
PRINCIPAL_ROIN This is the principal of the rollover child contract. It equals the amounts of PRINCIPAL_ROLL and <INTEREST_COMPONET>_ROLL.
PRINCIPAL_ADDL The incremental Principal amount that has to be paid to borrower in a money market deal rollover

In addition to these you can define amount tags as per your requirements for interest and charges that will be attached to the product.

10.4 Accounting Roles

In this section we have provided two separate lists of sample accounting roles. List I contains accounting roles that can be set up for a Placement product. List II contains samples of accounting roles that are applicable for a Borrowing product.

10.4.1 List I – Acct Roles for a Placement Product

Accounting Role Description Role Type
BROKEXP Brokerage Expense Expense
BROKPAY Brokerage Payable Liability
BROKPIA Brokerage payable in advance Asset
ASSETGL Asset GL for Placements Asset
FWDASSETGL GL for Future Dated Placements Contingent Asset
FWDASSETOFF Offset for Future Dated Placements Contingent Liability
INTERINC Fixed Interest Rate Income
INTERRIA Fixed Interest Rate Liability
PENL1INC Penal Int on Ovd Principal Income
PENL1REC Penal Int on Ovd Principal Asset
CHARGINC Common Flat Amt W/o Slab Income
ComponentUNRL Unrealized Income Income
ROLL_WASH Bridge account to wash the original parent’s outstanding balances to the child contract Asset

10.4.2 List II – Acct Roles for a Borrowing Product

Accounting Role Description Role Type
LIABGL Liability GL for Borrowings Liability
FWDLIABGL GL for Future Dated Borrowings Contingent liability
FWDLIABOFF Offset for Future Dated Borrowings Contingent Asset
INTEREXP Fixed Interest Rate Expense
INTERPIA Fixed Interest Rate Asset
INTERPAY Fixed Interest Payable Liability
CHARGEXP Common Flat Amt W/o Slab Expense
FRTAX1_PAY Tax payable role forFRTAX1 Liability
FRTAXS_PAY Tax payable role for FRTAXS Liability
ComponentREAL* Realized Income Income

* The ‘component’ is the ICCF component that you have created.

Note

In the accounting roles listed above the prefixes INTER (Interest), PENL (Penalty), BROK (brokerage), CHARG (Charge) FRTAX1 (Tax) and FRTAXS are ICCF components.

The suffixes stand for:

AQP Acquired interest payable
AQR Acquired interest receivable
EXP Expense
PAY Payable
PIA Payable in advance
REC Receivable
RIA Received in advance

10.5 Event-wise Accounting Entries and Advices

In the subsequent sections we have defined suggested accounting entries and advices for each of the events in the life-cycle of an MM deal. Samples of accounting entries, advices, and events have been given for four different types of MM deals. They are:

Also note that some of the Amount Tag’s linked to the Accounting Roles are user defined.

10.5.1 MM Placement with True Discounted Interest

The preferences set for this product are as follows:

10.5.1.1 BOOK: Booking

Accounting Entries

Accounting Role Amount Tag Dr./Cr. Indicator
CHARGINC CHARG Credit
CUSTOMER CHARG Debit
FWDASSETOFF PRINCIPAL_FWD Credit
FWDASSETGL PRINCIPAL_FWD Debit

 

Advices

Advice Name Description
MM_DEAL_SLIP Deal Slip
SWIFT_MESSAGE MT320, MT330, MT335, MT350
PAYMENT_MESSAGE Payment Message
MMCONPLA MM Placement Confirmation

10.5.1.2 INIT: Initiation

Accounting Entries

Accounting Role Amount Tag Dr./Cr. Indicator
INTERRIA INTER_LIQD Credit
CUSTOMER INTER_LIQD Debit
ASSETGL PRINCIPAL Debit
CUSTOMER PRINCIPAL Credit
FWDASSETGL PRINCIPAL_FWD Credit
FWDASSETOFF PRINCIPAL_FWD Debit
FWDASSETGL PRINCIPAL_FWD Debit
FWDASSETOFF PRINCIPAL_FWD Credit
ASSETGL PRINCIPAL_ROIN Debit
ROLL_WASH PRINCIPAL_ROIN Credit
ASSETGL PRINCIPAL_ADDL Debit
CUSTOMER PRINCIPAL_ADDL Credit

 

Advices

Advice Name Description
MM_CONT_ADV Contract Advice

 

10.5.1.3 ACCR: Interest Accrual

Accounting Entries

Accounting Role Amount Tag Dr./Cr. Indicator
INTERINC INTER_ACCR Credit
INTERRIA INTER_ACCR Debit
PENL1INC PENL1_ACCR Credit
PENL1REC PENL1_ACCR Debit

 

Advices

No advices allowed for this event.

10.5.1.4 LIQD: Liquidation

Accounting Entries

Accounting Role Amount Tag Dr./Cr. Indicator
PENL1REC PENL1_LIQD Credit
CUSTOMER PENL1_LIQD Debit
ASSETGL PRINCIPAL_LIQD Credit
CUSTOMER PRINCIPAL_LIQD Debit

 

Advices

Advice Name Description
SWIFT_MESSAGE MT320, MT330, MT335, MT350
PAYMENT_MESSAGE Payment Message

 

10.5.1.5 VAMB: Value Dated Amendment Booking

Accounting Entries

Nil

Advices

Advice Name Description
MMAMDADV Amendment Advice

 

10.5.1.6 VAMI: Value Dated Amendment Initiation

Accounting Entries

Nil

Advices

Advice Name Description
SWIFT_MESSAGE MT320, MT330, MT335, MT350

10.5.1.7 CAMD: Contract Amendment

Accounting Entries

Nil.

Advices

Advice Name Description
SWIFT_MESSAGE MT320, MT330, MT335, MT350

10.5.1.8 REVN: Rate Revision

Accounting Entries

No accounting entries allowed for this event.

Advices

Nil

10.5.1.9 REVC: Reversal

Accounting Entries

No accounting entries allowed for this event.

Advices

Advice Name Description
SWIFT_MESSAGE MT320, MT330, MT335, MT350

 

10.5.1.10 ROLL: Rollover

Accounting Entries

Accounting Role Amount Tag Dr./Cr. Indicator
PENL1REC PENL1_LIQD Credit
CUSTOMER PENL1_LIQD Debit
CUSTOMER PRINCIPAL_LIQD Debit
ASSETGL PRINCIPAL_LIQD Credit
CUSTOMER PRINCIPAL_LIQD Debit
ASSETGL PRINCIPAL_LIQD Credit
CUSTOMER <Interest_Component>_LIQD Debit
Interest_componen­tREC <Interest_Component>_LIQD Credit
ROLL_WASH PRINCIPAL_ROLL Debit
ASSETGL PRINCIPAL_ROLL Credit
ROLL_WASH <Interest_Compo­nent>_ROLL Debit
Interest_componen­tREC <Interest_Compo­nent>_ROLL Credit

 

Advices

Advice Name Description
MM_ROLL_ADV Rollover Advice
SWIFT_MESSAGE MT320, MT330, MT335, MT350

 

10.5.2 MM Borrowing with Fixed Discounted Interest

The preferences set for this product are as follows:

10.5.2.1 BOOK: Booking a Borrowing with fixed discounted interest

Accounting Entries

Accounting Role Amount Tag Dr./Cr. Indicator
CHARGEXP CHARG Debit
CUSTOMER CHARG Credit
FWDLIABGL PRINCIPAL_FWD Credit
FWDLIABOFF PRINCIPAL_FWD Debit

 

Advices

Advice Name Description
MMBRKCON Broker Confirmation
MM_DEAL_SLIP Deal Slip
SWIFT_MESSAGE MT320, MT330, MT335, MT350
PAYMENT_MESSAGE Payment Message
MMCONDEP MM Borrowing Confirmation

 

10.5.2.2 INIT: Initiation of a Borrowing with fixed discounted interest

Accounting Entries

Accounting Role Amount Tag Dr./Cr. Indicator
FRTAX1_PAY FRTAX1_AMT Credit
CUSTOMER FRTAX1_AMT Debit
CUSTOMER FRTAXS_AMT Debit
FRTAXS_PAY FRTAXS_AMT Credit
INTERPIA INTER_LIQD Debit
CUSTOMER INTER_LIQD Credit
LIABGL PRINCIPAL Credit
CUSTOMER PRINCIPAL Debit
FWDLIABGL PRINCIPAL_FWD Debit
FWDLIABOFF PRINCIPAL_FWD Credit

 

Advices

Advice Name Description
MM_CONT_ADV Contract Advice

 

10.5.2.3 ACCR: Accrual of interest

Accounting Entries

Accounting Role Amount Tag Dr./Cr. Indicator
INTEREXP INTER_ACCR Debit
INTERPIA INTER_ACCR Credit
PENL1EXP PENL1_ACCR Debit
PENL1PAY PENL1_ACCR Credit

 

Advices

No advices allowed for this event.

10.5.2.4 LIQD: Liquidation

Accounting Entries

Accounting Role Amount Tag Dr./Cr. Indicator
LIABGL PRINCIPAL_LIQD Debit
CUSTOMER PRINCIPAL_LIQD Credit
CUSTOMER INTER_LIQD Credit
INTPIA INTER_LIQD Debit

 

Advices

Advice Name Description
SWIFT_MESSAGE MT320, MT330, MT335, MT350
PAYMENT_MESSAGE Payment Message
LIQDNOTC Liquidation Notice

 

10.5.2.5 VABM: Value Dated Amendment Booking

Accounting Entries

Nil

Advices

Advice Name Description
MMAMDADV Amendment Advice

 

10.5.2.6 VAMI: Value Dated Amendment Initiation

Accounting Entries

Nil

Advices

Advice Name Description
SWIFT_MESSAGE MT320, MT330, MT335, MT350

 

10.5.2.7 CAMD: Amendment

Accounting Entries

Nil

Advices

Advice Name Description
SWIFT_MESSAGE MT320, MT330, MT335, MT350

 

10.5.2.8 REVN: Rate Revision

Accounting Entries

No accounting entries allowed for this event.

Advices

Nil

10.5.2.9 ROLL: Contract Rollover

Accounting Entries

Accounting Role Amount Tag Dr./Cr. Indicator
CUSTOMER INTER_LIQD Credit
INTERPIA INTER_LIQD Debit
LIABGL PRINCIPAL_LIQD Debit
CUSTOMER PRINCIPAL_LIQD Credit

 

Advices

Advice Name Description
SWIFT_MESSAGE MT320, MT330, MT335, MT350
MM_ROLL_ADV Rollover Advice

 

10.5.3 MM Placement – Fixed Bearing Interest

The preferences set for this product are as follows:

10.5.3.1 BOOK: Booking

Accounting Entries

Accounting Role Amount Tag Dr./Cr. Indicator
FWDASSETGL PRINCIPAL_FWD Debit
FWDASSETOFF PRINCIPAL_FWD Credit

 

Advices

Advice Name Description
MMCONPLA MM Placement Confirmation
MM_DEAL_SLIP Deal Slip
SWIFT_MESSAGE MT320, MT330, MT335, MT350

 

10.5.3.2 INIT: Initiation

Accounting Entries

Accounting Role Amount Tag Dr./Cr. Indicator
ASSETGL PRINCIPAL Debit
CUSTOMER PRINCIPAL Credit
FWDASSETGL PRINCIPAL_FWD Credit
FWDASSETOFF PRINCIPAL_FWD Debit
FWDASSETGL PRINCIPAL_FWD Debit
FWDASSETOFF PRINCIPAL_FWD Credit
ASSETGL PRINCIPAL_ROIN Debit
ROLL_WASH PRINCIPAL_ROIN Credit
ASSETGL PRINCIPAL_ADDL Debit
CUSTOMER PRINCIPAL_ADDL Credit

 

Advices

Advice Name Description
MM_CONT_ADV Contract Advice

 

10.5.3.3 ACCR: Interest Accrual

Accounting Entries

Accounting Role Amount Tag Dr./Cr. Indicator
INTERINC INTER_ACCR Credit
INTERREC INTER_ACCR Debit
PENL1INC PENL1_ACCR Credit
PENL1REC PENL1_ACCR Debit
PENL2INC PENL2_ACCR Credit
PENL2REC PENL2_ACCR Debit

 

Additional Accounting Entries for Negative Interest allowed Product

Accounting Role Amount Tag Dr./Cr. Indicator
Negative Interest CompEXP Negative Interest Comp_ACCR Debit
Negative Interest CompPAY Negative Interest Comp_ACCR Credit

 

Advices

No advices allowed for this event.

10.5.3.4 LIQD: Liquidation

Accounting Entries

Accounting Role Amount Tag Dr./Cr. Indicator
CUSTOMER INTER_LIQD Debit
INTERREC INTER_LIQD Credit
PENL1REC PENL1_LIQD Credit
CUSTOMER PENL1_LIQD Debit
CUSTOMER PENL2_LIQD Debit
PENL2REC PENL2_LIQD Credit
ASSETGL PRINCIPAL_LIQD Credit
CUSTOMER PRINCIPAL_LIQD Debit

 

Additional Accounting Entries for Negative Interest allowed Product

Accounting Role Amount Tag Dr./Cr. Indicator
Negative Interest CompPAY Negative Interest Comp_LIQD Debit
Customer Negative Interest Comp_LIQD Credit

 

 

Advices

Advice Name Description
SWIFT_MESSAGE MT320, MT330, MT335, MT350
PAYMENT_MESSAGE Payment Message

 

10.5.3.5 VAMB: Value Dated Amendment Booking

Accounting Entries

Nil

Advices

Advice Name Description
MMAMDADV Amendment Advice

 

10.5.3.6 VAMI: Value Dated Amendment Initiation

Accounting Entries

Accounting Role Amount Tag Dr./Cr. Indicator
ASSETGL PRINCIPAL_INCR Debit
CUSTOMER PRINCIPAL_INCR Credit

 

Advices

Advice Name Description
SWIFT_MESSAGE MT320, MT330, MT335, MT350

 

10.5.3.7 CAMD: Contract Amendment

Accounting Entries

Nil

Advices

Advice Name Description
SWIFT_MESSAGE MT320, MT330, MT335, MT350

 

10.5.3.8 REVC: Reversal

Accounting Entries

No accounting entries allowed for this event.

Advices

Advice Name Description
SWIFT_MESSAGE MT320, MT330, MT335, MT350

 

10.5.4 REVN: Rate Revision

Accounting Entries

No accounting entries allowed for this event.

Advices

Nil

10.5.4.1 ROLL: Rollover

Accounting Entries

Accounting Role Amount Tag Dr./Cr. Indicator
CUSTOMER INTER_LIQD Debit
INTER_REC INTER_LIQD Credit
ASSET GL INTER_ROLL Debit
INTER_REC INTER_ROLL Credit
ASSETGL PRINCIPAL_LIQD Credit
CUSTOMER PRINCIPAL_LIQD Debit
CUSTOMER PRINCIPAL_LIQD Debit
ASSETGL PRINCIPAL_LIQD Credit
CUSTOMER <Interest_Component>_LIQD Debit
Interest_componentREC <Interest_Component>_LIQD Credit
ROLL_WASH PRINCIPAL_ROLL Debit
ASSETGL PRINCIPAL_ROLL Credit
ROLL_WASH <Interest_Component>_ROLL Debit
Interest_componentREC <Interest_Component>_ROLL Credit

 

Additional Accounting Entries for Negative Interest allowed Product

For Rollover of Interest

Accounting Role Amount Tag Dr./Cr. Indicator
Negative Interest CompPAY Negative InterestComp_ROLL Debit
ROLL_WASH Negative InterestComp_ROLL Credit

 

Advices

Advice Name Description
LD_ROLL_ADV Rollover Advice

 

10.5.5 MM Borrowing with Fixed Bearing Interest

The preferences set for this product are as follows:

10.5.5.1 BOOK: Booking a Borrowing with fixed bearing interest

Accounting Entries

Accounting Role Amount Tag Dr./Cr. Indicator
FWDLIABGL PRINCIPAL_FWD Credit
FWDLIABOFF PRINCIPAL_FWD Debit

 

Advices

Advice Name Description
MMBRKCON Broker Confirmation
MMCONDEP MM Borrowing Confirmation
MM_DEAL_SLIP Deal Slip
SWIFT_MESSAGE MT320, MT330, MT335, MT350
PAYMENT_MESSAGE Payment Message

 

10.5.5.2 INIT: Initiation of a Borrowing with fixed bearing interest

Accounting Entries

Accounting Role Amount Tag Dr./Cr. Indicator
FRTAXC_EXP FRTAXC_AMT Debit
FRTAXC_PAY FRTAXC_AMT Credit
LIABGL PRINCIPAL Credit
CUSTOMER PRINCIPAL Debit
FWDLIABGL PRINCIPAL_FWD Debit
FWDLIABOFF PRINCIPAL_FWD Credit

 

Advices

Advice Name Description
MM_CONT_ADV Contract Advice

 

10.5.5.3 ACCR: Accrual of interest

Accounting Entries

Accounting Role Amount Tag Dr./Cr. Indicator
INTEREXP INTER_ACCR Debit
INTERPAY INTER_ACCR Credit

 

Additional Accounting Entries for Negative Interest allowed Product

Accounting Role Amount Tag Dr./Cr. Indicator
NegativeInterest CompREC Negative Interest Comp_ACCR Debit
NegativeInterest CompINC Negative Interest Comp_ACCR Credit

 

Advices

No advices allowed for this event.

10.5.5.4 LIQD: Liquidation

Accounting Entries

Accounting Role Amount Tag Dr./Cr. Indicator
INTERPAY INTER_LIQD Debit
CUSTOMER INTER_LIQD Credit
CUSTOMER PRINCIPAL_LIQD Credit
LIABGL PRINCIPAL_LIQD Debit

 

Additional Accounting Entries for Negative Interest allowed Productl

Accounting Role Amount Tag Dr./Cr. Indicator
Customer Negative Interest Comp_LIQD Debit
Negative Interest CompREC Negative Interest Comp_LIQD Credit

 

Advices

Advice Name Description
SWIFT_MESSAGE MT320, MT330, MT335, MT350
PAYMENT_MESSAGE Payment Message

 

10.5.5.5 VABM: Value Dated Amendment Booking

Accounting Entries

Nil

Advices

Advice Name Description
MMAMDADV Amendment Advice

 

10.5.5.6 VAMI: Value Dated Amendment Initiation

Accounting Entries

Accounting Role Amount Tag Dr./Cr. Indicator
LIABGL PRINCIPAL_INCR Credit
CUSTOMER PRINCIPAL_INCR Debit

 

Advices

Advice Name Description
SWIFT_MESSAGE MT320, MT330, MT335, MT350

 

10.5.5.7 CAMD: Amendment

Accounting Entries

Nil

Advices

Advice Name Description
SWIFT_MESSAGE MT320, MT330, MT335, MT350

10.5.5.8 REVN: Rate Revision

Accounting Entries

No accounting entries allowed for this event.

Advices

Nil

10.5.5.9 ROLL: Rollover

Accounting entries

Accounting Role Amount Tag Dr./Cr. Indicator
CUSTOMER INTER_LIQD Credit
INTER_PAY INTER_LIQD Debit
ASSET GLLIABGL INTER_ROLL Credit
INTER_PAY INTER_ROLL Debit
ASSET GLLIABGL PRINCIPAL_LIQD Debit
CUSTOMER PRINCIPAL_LIQD Credit

 

Additional Accounting Entries for Negative Interest allowed Product

For Rollover of Interest

Accounting Role Amount Tag Dr./Cr. Indicator
LIABGL Negative InterestComp_ROLL Debit
Negative Interest CompREC Negative InterestComp_ROLL Credit

 

Advices

Advice Name Description
LD_ROLL_ADV Rollover advice

 

10.6 Entries for contracts liquidated with Previous Year Adjustment option

You will need to maintain the following accounting entry set-up when an MM contract is liquidated with previous year adjustment option.

During liquidation of an schedule/contract the unrealized accruals for the previous year are liquidated before liquidation of unrealized accruals for the current year.

For liquidating the interest components the system posts the following entries during Liquidation (LIQD) for a bearing contract:

Accounting Role Amount Tag Dr./Cr. Indicator
ComponentREC Component_LIQD Credit
Customer Component_LIQD Debit
ComponentUNRL Component_LIQD_PY Debit
ComponentINC Component_LIQD_PY Credit
ComponentUNRL Component_LIQD_CY Debit
ComponentINC Component_LIQD_CY Credit

If the interest has been collected in advance the following entries are passed:

Accounting Role Amount Tag Dr./Cr. Indicator
ComponentUNRL Component_LIQD_PY Debit
ComponentINC Component_LIQD_PY Credit
ComponentUNRL Component_LIQD_CY Debit
ComponentINC Component_LIQD_CY Credit

When the Amount Tag is of type component_LIQD_PY and the Accounting Role pertains to unrealized income/expense, the head for the accounting role will be replaced by the previous year adjustment GL, while passing accounting entries.

Note

In case a contract spans over multiple years, any event (Back dated Rate revision, Princi­pal Change etc, back dated booking of contract etc.,) which causes the accrual balances of the previous year to be recomputed, the accrual entries will be posted to the current year unrealized income and expense GL only.