Breaks are associated with Assets and Liabilities that have fixed maturities and have experienced a full prepayment or pre-closure, partial prepayment, or restructuring. Any event that causes the bank to receive a change to scheduled contractual cash flows on a fixed maturity instrument results in a break funding event and should be evaluated. Transactions that could cause a change in future cash flows would include full loan prepayments, partial loan prepayments, early withdrawal of a term deposits, or a change in maturity tenor, payment amount, payment frequency or other contractual terms.
The Break Identification Process allows you to perform the following tasks:
· Determine the data that you want to process (Product Selection block).
· Specify the parameters for the process. The parameters include break types like full break, partial break, and change in attributes.
· Execute or run the break identification request and generate results (Break Identification Process Summary Page).
To define and execute a break identification process. The Break Identification Process will compare current period instrument data with prior period instrument data to identify break events. When breaks are detected, the related instrument records are copied into the FSI_D_BREAK_FUNDING_CHARGES table. This table then becomes the source table for further FTP Adjustment Rule > Breakage Charge processing.
To create a break identification process, follow these steps:
1. Navigate to the Standard Break Identification Process summary page and create a new Break Identification Process.
Figure 1:
2. Select Product Selection block.
Figure 2:
3. Enter or select the following:
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Term |
Description |
|---|---|
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Folder |
The folder where you can save the definition. You can give other users, read/write or read only privileges. |
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Filter |
Filters allow you to restrict your data selection based on any attribute that exists within an instrument table. You define filters under Common Object Maintenance, and reference your filter within the Product Selection block of your Process. The choice of the data filter would determine the instrument records that should be picked up from the As-of-date and the prior period date for comparative analysis. The supported Filter Types are: Attribute Filter, Data Filter, Hierarchy Filter, and Group Filter. |
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Source |
Allows you to select one or more source Instrument tables to include in your process. Based on the Instrument Table(s) selected, the instrument records on the As-of-date and the prior period date are chosen for comparison. |
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Target Table |
Indicates the destination table where break event records will be posted. The default (seeded) table is the FSI_D_BREAK_FUNDING_CHARGES table. Users can additionally register user defined tables for posting Breakage Funding records if needed. |
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Parameters |
There are three types of break parameters for the accounts: · Full Break: Fully repaid or terminated accounts are considered as a Full Break. · Partial Break: Partly repaid accounts are considered as Partial Break. · Change in Attributes: Here a restructure of the Instrument record happens due to change in critical attributes or terms other than Balance. You can execute these breaks individually or together. |
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Minimum Break Amount |
Minimum Break applies to both Positive and Negative breakage amounts. If the user enters minimum break as 1000, it means that minimum break amount ranges from -1000 to +1000. If the Breakage Amount that is calculated is less than or equal to the Minimum Break Amount, then it is not passed to the Break Funding Charges table. |
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Freeze Process |
The freeze process block allows you to finalize the assumptions made in the Process definition flow or to clear all assumptions. |
§ Select a Filter (optional) to constrain the data to be included in the process. The supported Filter Types are: Attribute Filter, Data Filter, Hierarchy Filter, and Group Filter.
§ Select the source table(s) that you want to include in the process.
§ Select the target table, which is a Break Funding Instrument table.
4. Select the Parameters block.
Figure 3:
§ Select the type of break that you would like to search for and fill the related details. In the case of a Full Break, the filter will work only on the prior period instrument record. In the case of a Partial Break or Change in Attributes, the filter will work on both the prior period and current period instrument records.
§ Input the Minimum Break Amount as a positive value. The engine will apply the absolute value of the amount input ranging from - input amount to + input amount. For example, if the input is 100, then break amounts between -100 and +100 will be excluded. This input allows you to filter very small / insignificant break amounts, reducing the amount of data copied into the Break Funding Charges table.
Note there are two approaches for determining the Prior Period Date. You can input the Prior Period Reference Term and based on the current As of Date, the Prior Period Date will be calculated, or you can select the “Use Nearest Prior Date” option, and the engine will then look back at the historical data to determine the nearest prior As of Date and will use this as Prior Period Date.
5. Select the Freeze Process block.
Figure 4:
§ Select Freeze to complete the process.
§ Select Reset to erase all selections made previously within the process definition flow.
§ Select Confirm.
You execute a Break Identification to compare current period and prior period data to identify different break types.
To execute a break identification process, follow these steps:
1. Perform the basic steps for Creating a Break Identification Process.
2. There are two approaches for executing the break identification process:
3. UI Based Procedure:
a. Navigate to the Break Identification Process summary page.
Figure 5:
b. Select a Process that you want to execute or run.
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NOTE |
The status column indicates whether or not a process can be run. There are three possible status conditions: · Complete: Indicates the process is fully defined and ready to be run. · Incomplete: Indicates the process is partially defined and cannot be run. · View Log: Indicates the process has already been run and also indicates a process can be re-run. In this case View Log is a hyperlink that allows you to navigate to the Log Viewer page where you can review any processing errors or alerts related to this process. |
Figure 6:
c. After executing the preceding process, select the View Log Hyperlink.
Figure 7:
a. Select the Task ID (also known as the unique system identifier) to view a report for any processing errors.
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NOTE |
If significant processing errors exist, you should re-run your process. |
The Break Identification process is complete.
4. Batch Based Procedure:
Break Identification Processes can also be executed as batch processes. The following approaches are available:
Simplified Batch:
a. Navigate to Financial Services Applications, select Administration, and then select Simplified Batch.
b. Create a New Simplified Batch.
c. Select Task Type Transform Data.
d. Select Break_Detection from the list of seeded process types.
e. Input the following in the Optional Parameters text box:
'Break Detection Process System ID','User ID', for example, '200883','TPUSER'
f. Save the rule and Execute.
ICC Batch:
a. Navigate to Operations and select Batch Maintenance.
b. Create a new batch.
c. Select the Batch Name to add the task.
d. Click the Add button under the Task Details section.
e. Define the Task ID and Description.
f. Select Components as Transform Data.
g. Select Break_Detection from the list of seeded process types.
h. Input the following required parameters:
Break Detection Process System ID and User Name. These parameters should be given in the follow format (sys Id, User Id), for example: 101000, TPUSER.
i. Save the rule and Execute.
1. Navigate to Rules Framework and then select Process.
2. Create a new rule.
3. Define the Folder, Code, and Name of rule.
4. Select the Component as Transform Data.
5. Select Break_Detection from the list of seeded process types.
6. Input the following required parameters:
Break Detection Process System ID and User Name. These parameters should be given in the follow format (sys Id, User Id), for example: 101000, TPUSER.
7. Save the rule and Execute.
Processing time for Break Identification Processes can be reduced by modifying parallel processing parameters in the FSI_PARALLEL_PARAMETERS table.
Parallel execution related parameters for Break Identification are seeded by the application with a process_engine_cd value of "3" in the FSI_PARALLEL_PARAMETER table.
The Break Identification process looks for the value given in parallel_query field. If the value is given as "ENABLED", the engine uses the PARALLEL_DEGREE input and sets the degree of parallelism for execution of the queries within the Break Identification engine.
These values should be set by the user or implementation team, when they want to take advantage of parallel query executions. The optimal value for the PARALLEL_QUERY input depends on the environment and should be iteratively tested to arrive at the appropriate value.