4.31.6 Placement Processing

1. This functionality is applicable for the match funded placement contracts linked to both Lead agented and non-Lead agented deals.
2. After the trade settlement (sell trade) is STP’d to OL, at the time of OL negative VAMI processing, the system checks if any match funded placement contract is present for the associated loan.
3. If any match funded placement contract is identified, the contract amount of such placement contracts are reduced systematically for each sell trade to the extent of the amount of the trade and asset ratio at the tranche level for that participant.
4. Systematic reduction on the placement contracts is done as a prepayment. LIQD event is registered in the placement contract with value date as settlement date of the trade.

Example 1

Tranche	Asset Ratio
P1 (Fronted Portfolio)	60%
P2 (Un-fronted Portfolio)	30%
P3	10%

Tranche Amount	$10,000
P1 Share (Fronted Portfolio)	$6000
P2 Share (Un-fronted Portfolio)	$3000
P3Share	$1000

Drawdown1 Amount	$2000
P1 Share (Fronted Portfolio)	$1200
P2 Share (Un-fronted Portfolio)	$600
P3Share	$200

• Commitment1 (STP’d from Tranche P1) - $6000
• Commitment2 (STP’d from Tranche P2) - $3000

• Loan1 (STP’d from DD P1) - $1200
• Loan2 (STP’d from DD P2) - $600

• Placement1 (For Loan1) - $1200
• Placement2 (For Loan2) - $600

Trade received: P1 Selling $1000 to P3.

After settlement, positions at tranche / drawdown / commitment / loan / placement contracts are as below:

Tranche Amount	$10,000
P1 Share (Fronted Portfolio)	$5333.34 ($6000- ((6000 / 9000) *1000))
P2 Share (Un-fronted Portfolio)	$2666.67 ($3000- ((3000 / 9000) * 1000))
P3Share	$2000

Drawdown1 Amount	$2000
P1 Share (Fronted Portfolio)	$1066.67 (53.33% of $2000)
P2 Share (Un-fronted Portfolio)	$533.33 (25.55% of $2000)
P3Share	$400 (10% of $2000)

• Commitment1 - $5333.34
• Commitment2 - $2666.67

• Amount to be reduced on Loan1 - $133.33 ($1200 - $1066.67)
• Amount to be reduced on Loan2 - $66.67 ($600 - $533.33)
• Pre-payment on Placement1 - $133.34
• Pre-payment on Placement2 - $66.67

After systematic reduction in the placement contract, the new position is as follows:

• Placement1 (For Loan1) - $1066.67
• Placement2 (For Loan2) - $533.33

1. If there are multiple trade settlements on the same day, for each settlement system registers LIQD event and reduce the contract amount to the extent of the amount of the trade and asset ratio at the tranche level for that participant.
2. If trade settlement is received after the treasury cut off, then system processes the reduction as a future dated payment and the payment is processed in the next day’s batch.
3. If the trade settlement on the primary trade is reversed (RSTL), the prepayment (LIQD) posted in the placement contract for amount reduction is not reversed. The same should be operationally controlled.