Understanding Position Limits and Exposure Positions

Before you can track and monitor your positions, you must define limit checking controls to manage your exposures on the Tree Manager - Position Limits page.

You must also determine the method of limit warning notification.

To implement the Position Limit Workflow virtual approval methodology, use PeopleSoft Application Designer to define business processes, activities, business events, worklists, routings, and approval rule sets.

The integration between Treasury and Notification Framework will be delivered as system data to support email and worklist notifications, as shown in this table:

See the product documentation for PeopleTools: Application Designer Developer's Guide and PeopleSoft Events and Notifications Framework.

Risk Management works with your organization to manage the positions on the books and exposures related to them. PeopleSoft enables internal control procedures for checking position limits while providing you with a tool to define each person's area of accountability regarding limit violation reviews. You can monitor your exposures, check your limits, and notify the appropriate person of limit violations.

In Risk Management, an exposure is the amount of risk associated to a position from variables such as interest rates or currency exchange rates. Fluctuations in these rate types or in foreign markets can increase or decrease the amount of risk/exposure for a position. You can determine exposures from across the enterprise, and by establishing limits, you can link operational controls and risk management policies and procedures with day to day treasury operations.

PeopleSoft is flexible enough to manage any kind of exposure, including:

• Currency exposure.

• Interest rate exposure.

• Counterparty risk.

• Country risk.

• Individual dealer positions.

• Specific instrument limits.

• Specific business unit limits.