5.1.13 Specifying Brokerage Details

Secondary loan trading can involve brokers who charge a commission fee for their brokerage services. Brokerage is always calculated on the original trade amount. Any amendment in the trade amount as a result of commitment reduction does not affect the calculation of broker’s commission, as it is calculated on the initial trade amount.

For line trades involving the origination desk, brokerage is applicable only for the Origination sell line trade and not for the other two Par trades linked to the line trade.

Following steps are involved in capturing and processing the brokerage fee associated with a trade contract:

1. Broker Id of the broker involved in the trade is captured in the Draft Trade screen, while booking the SLT contract.
2. The brokerage fee component gets linked to the SLT product in the SLT Product Fee Details screen.
3. The brokerage fee type, rate, and the fee amount are captured in the Fee Components screen associated with the contract.
4. The brokerage fee gets displayed in the Funding Memo screen, where it can be waived off, if required. You can waive off this fee in the Draft Trade screen or Fee Amendment screen also.

The accounting entries posted for brokerage as part of trade settlement or fee liquidation is specified below:

• Dr - Expense A/c - Brokerage Amount
• Cr - Brokerage Payable A/c - Brokerage Amount

The actual liquidation of brokerage is handled by the Brokerage module.

For more details on brokerage liquidation refer the section titled Liquidating Brokerage Manually in Brokerage user manual.