This chapter contains the following sections:
In this chapter, you can define attributes specific to a Secondary Loan Trading product.
You can create an SLT product and maintain basic information relating to the product such as the product code, description, product type and so on, in the ‘Secondary Loan Trade - Product Definition’ screen.
This section contains the following topics:
You can invoke the ‘Secondary Loan Trade- Product Definition’ screen by typing ‘TLDPRMNT’ in the field at the top right corner of the Application tool bar and clicking on the adjoining arrow button.
For an SLT product, you can define generic attributes such as branch, currency, customer restrictions, and so on, by clicking on the appropriate icon in the horizontal array of icons in this screen. In addition to these generic attributes, you can define attributes specifically for an SLT product. These attributes are discussed in detail in this chapter.
For further information on these generic product attributes, refer the following Oracle FLEXCUBE User Manuals.
You can specify the following details specific to SLT module, in this screen:
Product Code
Specify a unique identification code for the SLT product.
Product Module
The product module displays a default value ‘LT’ indicating Secondary Loan Trading.
Product Type
Select the type of the SLT product from the drop-down list. The following options are provided:
Description
Specify a suitable description for the product.
Product Slogan
Specify a slogan for promoting the product.
Product Group
Select the group to which the product belongs from the option list provided.
Start Date
Specify the date on which the product becomes effective.
End Date
Specify the date on which the product ceases to be effective.
Format Name
Select the format name to be used to generate the customer reference number.
Remarks
Specify additional remarks regarding the SLT product, if any.
Preferences are the options available for defining the attributes of a product. You can specify the preferences associated with an SLT product in ‘Secondary Loan Trade – Product Preferences’ screen. To invoke this screen, click ‘Preferences’ in the Product Definition screen.
You can specify the following details in this screen:
Settlement Days
Specify the number of days after the trade, within which settlement should happen.
Settlement/Funding Memo Required
Select this check box to indicate that a settlement or a funding memo needs to be sent to the trade counterparty.
Internal Deal
Select this check box to indicate that the trade deal involved is an inter company deal.
Note
You need to deselect ‘Settlement/Funding Memo Required’ for internal deals.
You can indicate your preferences for holiday treatment, here.
Holiday Ccy
Select the currency associated with a trade deal, for which you want to specify the holiday preferences.
Ignore Holidays
Select this check box to indicate that the settlement date is fixed without taking the holidays into account.
Consider Branch Holiday
Select this check box to indicate that the settlement date is fixed taking into consideration the holidays specified for the branch.
Apply Local Ccy
Select this check box to indicate that local currency holidays need to taken into consideration while fixing the settlement date.
Apply Contract Ccy
Select this check box to indicate that the contract currency holidays need to taken into consideration while fixing the settlement date.
Delayed compensation fee is associated with trades for which the trade settlement date exceeds the expected settlement date. You can specify the following preferences related to DCF here:
Accrual Required
Select this check box to indicate that you need to accrue the delayed compensation fee component at specific intervals.
Frequency
Select the frequency at which you would like to accrue the delayed compensation fee, from the options provided in the drop-down list. The following options are available:
Start Month
Select the month in which the accrual of the fee component has to begin, from the drop-down list provided.
This is applicable if you specify any accrual frequency other than daily or monthly.
Start Day
Specify the date on which the accrual should be done during the month. For example, if you specify the date as ‘20’, accrual is carried out on that day of the month, depending on the accrual frequency.
Allow Amendment of Non Accrual
Select this check box to indicate that the system allows you to change the preference maintained for the box ‘Stop DCF Accrual’ at Position contract level.
Trade Date Accounting
Select this check box to indicate that the trade date accounting functionality is applicable for the following products maintained for CFPI trading:
If this check box is deselected for any product, then system does not post trade date accounting entries for the contract associated with the product. This results in position break in control accounts.
Note
You cannot amend this check box once the product is authorized.
Rekey Required
Select this check box to indicate that certain important details related an SLT need to be rekeyed, at the time of authorization. You can specify any or all of the following as rekey fields:
HFS Transfer
Select this check box to indicate that trades under this product should be considered as HFS transfer transactions. Note that you can select this check box only if the check box ‘HFS transfer and Sale’ is selected in the ‘Loan Parameters’ screen.
Once the product is authorized, you cannot deselect this check box.
You can specify the details regarding the fee associated with an SLT
in ‘SLT Product Fees Details’ screen. To invoke this screen,
click ‘Fees’ in the ‘Secondary
Loan -Product Definition’ screen.
You can specify the following details regarding fee, in this screen:
Component
Specify the name of the fee component for which you are maintaining the details.
Description
Specify a suitable description for the fee component.
Fee Type
Select the type of the fee from the drop-down list. The following options are provided:
DCF Category
Select the sub category associated with the delayed compensation fee from the drop-down list. The following options are provided:
DCF category is enabled only if you select the fee type as ‘DCF’.
The formula to calculate COC is given below;
The computation is done based on the method ‘Rule of 25’ and will continue until the actual settlement date. The derivation of ‘Rule 25 on T+20 and T+21’ is mentioned below:
[(Fund*Price– (Unfunded + Commitment Reduction)*(1–Price)] as of T+20 (Expected Settlement Date)
Rule-25-factor on T+20 = -----------------------------------------------------------------------------------
[(Fund*Price– (Unfunded + Commitment Reduction.)*(1–Price)] as of Trade Date
[(Fund*Price– (Unfunded + Commitment Reduction.)*(1–Price)] as of T+21
Rule-25-factor on T+21 = -----------------------------------------------------------------------------------
[(Fund*Price– (Unfunded + Commitment Reduction.)*(1–Price)] as of Trade Date
Note
For the trade currency,
For the other funded currencies,
For the trade currency,
For the other funded currencies,
Fee Calc Basis
Select the source for deriving the ‘Fee Basis’ for calculating the fee amount, from the drop-down list. The following options are provided:
This is enabled if you select the fee type as ‘DCF’ or ‘Break-fund Fee’.
Fee Basis
The Fee Basis indicates the method in which a given fee amount has to be calculated. The values in the drop-down list are:
This is enabled if you select the fee type as ‘DCF’ or ‘Break-fund Fee’. If you specify the Fee Calc Basis as ‘Agency’, this will get disabled.
Stop Association
Select this check box to indicate the fee component should not be associated with the product henceforth.
Note
There are no fee components associated with internal deal type of products.
Status Tracking Required
Select this check box to allow the system to start and restart accrual of DCF components.
Note
You can select this check box only for the following type of DCF components:
This section contains the following topics:
Control accounts can be a GL or a customer account, which is used to distinguish the trade date and settlement date balances for a given SLT trade. The following table gives a brief description of the various control accounts:
Control Account |
Description |
Control Account#1 |
Account to track the latest trade portion of funded amount |
Control Account#2 |
Account to track the trade portion of funded amount as of settlement date |
Control Account#3 |
Account to track the Premium/Discount and PNL amount as of trade date |
Control Account#4 |
Account to track the Premium/Discount and PNL amount as of settlement date |
In SLT module, accounting entries are defined for the following products with control accounts:
System does a zero-based computation to arrive at the trade portion of funded and unfunded amount. System also computes the premium discount and PNL amount. Based on the accounting setup, system appropriately posts the accounting entries to the control accounts for SLT trades and origination contracts. For zero-based computation, system considers the latest trade amount from SLT as well as the funded and unfunded amount as on the application date for the CUSIP from agency.
Funded and unfunded percentage is calculated as follows:
Note
System posts the accounting entries in SLT module as follows:
The SLT Batch for trade date accounting is used to track the funded or unfunded balance change for the associated CUSIP in the agency module. System computes the funded and unfunded percentage based on funded and unfunded balance from agency as of application date and applies the percentage on the latest trade amount in SLT to arrive at the trade portion of the funded and unfunded amount.
The computed trade portion of funded and unfunded balances is compared with the funded and unfunded balances already posted for the SLT trades. If there is any difference, then system posts the additional entries for the funded and unfunded amount as follows:
Trade settlement flowing to origination module through STP processing impacts the control accounts instead of the inventory accounts for the loan contracts
You should manually maintain the appropriate control account (Control Account#2) at the origination loan product level so that the accounting entries are posted at control account 2 during trade settlement which flows to origination module through STP.
All the independent loan activities manually performed by a user such as new loan booking, value dated amendment for loan principal increase/decrease, loan payment and all the corresponding reversal events will post the accounting entries at control account 2, based on the product accounting setup.
Note