4. Defining Attributes of an SLT Product

This chapter contains the following sections:

4.1 Introduction

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 Banking Corporate Lending 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.

4.1.1 Specifying Product Preferences

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.

Suppress Ticket Settlement

The ‘Suppress Ticket Settlement’ check box is cleared by default. You can select this check box as part of product amendment.

You are not allowed to select ‘Suppress Ticket Settlement’ check if the ‘Automate Ticket Settlement’ check box is not selected and authorized in the 'Loans Parameters' screen.

Note

The system does not validate if the ‘Automate Ticket Settlement’ check box is not selected in the 'Loans Parameters' screen when the ‘Suppress Ticket Settlement’ is selected and authorized in the 'Secondary Loan Trade- Product Definition’ screen.

The system does not validate if the ‘Suppress Ticket Settlement’ check box is not selected in the 'Secondary Loan Trade- Product Definition’ screen when the new flag ‘Automate Ticket Settlement’ is checked/unchecked in the 'Loans Parameters' screen.

If the ‘Suppress Ticket Settlement’ check box is selected, the trades booked under the product are excluded from systematic settlement even if the ‘Automate Ticket Settlement’ check box is selected in the 'Loans Parameters' screen.

If the ‘Suppress Ticket Settlement’ check box is not selected, the trades are settled sys­tematically if the ‘Automate Ticket Settlement’ check box is selected in the 'Loans Param­eters' screen.

If you copy an existing product with the ‘Suppress Ticket Settlement’ check box selected, the check box value is not copied.

Markit Trade Settlement Allowed Check box - Loans Parameters Screen

Automate Ticket Settlement Check box - Loans Parameters Screen

Suppress Ticket Settlement Check box - SLT Product Definition Screen

Processing in Corporate Lending

Selected

Selected

Not Selected

The system pro­cesses the effective Markit SDN message and the settlement systematically. Only effective SDN notices that are received from Markit are pro­cessed. Other notices are not processed.

Not Selected

Selected

Not Selected

Any notice received from Markit is not pro­cessed. You should process trade settle­ment manually.

Selected

Not Selected

Not Selected

The notices received from Markit is pro­cessed. However sys­tematic trade settlement is not pro­cessed on receipt of notices from Markit. All the notices such as trade match, syn­dicated loan trade allocation, trade sta­tus update, settle­ment details and trade closed notice are processed.

Not Selected

Not Selected

Not Selected

Any notice received from Markit is not pro­cessed. You should process trade settle­ment manually.

Selected

Selected

Selected

For the trades con­tracts booked under this product, neither the new automated settlement process on receipt of effective SDN is done nor the old set of Markit notices are pro­cessed. You should process trade settle­ment manually.

Not Selected

Selected

Selected

Any notice received from Markit will not be processed. User should process trade settlement manually.

Selected

Not Selected

Selected

The notices received from Markit will be processed. However systematic trade set­tlement will not be processed on receipt of notices from Markit. All the notices such as trade match, syndicated loan trade allocation, trade sta­tus update, settle­ment details and trade closed notice will be processed by Oracle Banking Cor­porate Lending.

Not Selected

Not Selected

Selected

Any notice received from Markit will not be processed. User should process trade settlement manually.

Specifying Holiday Preferences

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 Holiday Currency

Select this check box to indicate that local currency holidays need to taken into consideration while fixing the settlement date.

Apply Contract Holiday Currency

Select this check box to indicate that the contract currency holidays need to taken into consideration while fixing the settlement date.

Apply Fin Centre Holiday Currency

This check box allows you to enable financial centre holiday treatment and add the financial centres for the holiday treatment.

For more information about maintaining financial centre for holiday treatment refer to Products User Manual.

Specifying DCF Details

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.

Specifying Rekey Details

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.

LMA/LSTA Participation

The ‘LMA / LSTA Participation’ (Loan Market Association /Loan Syndications and Trading Association, Inc.) check box is not selected by default. This check box is enabled only for ‘Trade’ products. Even after authorization, you can edit this check box.

However, the change in the value of check box impacts only the new trades booked under the product. Existing trade contracts are not impacted. The value of the check box is copied when you copy an existing trade product with the check box selected.

Product Restrictions

When you create a product, you can provide product restrictions. That is, you can specify the branches of your bank that can offer this product, the currencies that are allowed or disallowed and the customers who can avail the product.

You can set preferences in this screen and the same is defaulted to 'Bilateral Loan and Commitment Restrictions' screen.

4.1.2 Specifying Fee Details

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:

4.2 Control Accounts for SLT Trades

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:

4.2.1 Processing 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:

4.2.2 Processing SLT Batch for Trade Date Accounting

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:

4.2.3 Control Account for Origination Contracts

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