4.2.16.5 Specifying the Currency Rounding Logic for Interest Components

A Loans contract or Money Market deal inherits the currency-wise rounding rules defined for interest components, in the interest class associated with the product used by the contract.

Such inherited rounding rules can be altered, if required, when the contract is entered. For the main interest component, the applicable rounding rules can be altered in the main Contract Online screen.

The following rounding rules can be specified:

• How the interest amounts in respect of the interest component in the specified currency are to be rounded – truncated, rounded up, rounded down, or rounded near.
• If truncation is opted for, the number of digits after the decimal place, to which interest amounts in respect of the interest component in the specified currency, must be truncated. The number of digits specified for truncation cannot exceed the allowed decimal places for the specified currency. If not specified, the number of decimals indicated in the Currency Definition for the specified currency is picked up by the System.
• For the Round Up, Round Down and Round Near options, the rounding unit, which is the lowest possible measure in which the interest amounts in respect of the interest component in the specified currency, can be considered. This value cannot be less than the rounding unit for the specified currency in the Currency Definition. If not specified, the rounding unit indicated in the Currency Definition for the specified currency is picked up by the System.

The rounding rules so defined would also be applicable for any special interest and / or rollover special interest amount in respect of the contract.

The rounding rules for any of the interest components applicable for the contract can be specified in the ICCF Details screen, which can be invoked by clicking on the ‘I’ button in the Contract Online screen.

Application of Rounding Rules during Interest Processing

When the System processes any of the following events in respect of a Loans contract, the rounding rules defined for the interest component applicable for the contract are picked up:

• Interest Schedule Calculation
• Interest Accrual
• Manual Liquidation
• Contract Rollover (if a partial liquidation is done, the rules are applied on the interest liquidation amount, and any differential amount arising from this is adjusted. An override is sought in such a case)
• Auto Liquidation

If the rounding rules are not available from the contract details, the rounding rules specified in the Currency Definition are used.