4.8.1 Processing CLP Sell Line Trades

For CLP Sell line trades involving the origination desk, the following three separate trade deals are generated.

1. Par desk selling to customer
2. Par desk buying from origination desk
3. Origination desk selling to par desk

Note:

Loans QT may send multiple sell trade from par desk to customer (the first type of trade mentioned above) for line trades within a single ticket.

These three deals are created under the same ticket and are settled together during the ticket settlement. For the first trade, where par desk sells to customer, you need to select the Parent Line Trade check box.

The origination trade processing is carried out as follows:

1. When the third trade details, that is, origination desk selling to par desk, are handed off from Loans QT to Oracle Banking Corporate Lending, the system checks if the related trade is a line trade.
2. If it is a line trade, then the details of this origination sell trade get populated in the Line Trade – Origination Details screen. Unamortized fee amount, Reserve amount and the Contra amount applicable for the origination desk corresponding to the Participation sell gets defaulted, whereas Participation buy should be handled manually.
3. The origination line trade is processed once you confirm these details.

Note:

If the contra and reserve are captured in cross currency loans, then the contra and reserve is not defaulted and it is assumed to be zero.

To capture details of line trade - origination details screen

Specify the User ID and Password, and login to Homepage.

1. On the homepage, type TLDORGQU and click next arrow.
   The Line Trade – Origination Details screen is displayed.

   Note:

   The fields which are marked in asterisk red are mandatory fields.

   Figure 4-18 Line Trade – Origination Details

   
   

   
   Description of "Figure 4-18 Line Trade – Origination Details"

   
   
2. Following details related to the origination line trade are displayed here.
   • Trade amount, price, trade booking date, trade currency and the expected settlement date
   • Deal Type
   • Position identifier, product, and portfolio
   • Desk, branch, and expense code
   • Unamortized fee amount (or FAS91 Fee Amount), contra amount and writeoff amount. If the cost of credit valuation is being done for the commitment, then the sytem displays the FAS91 Fee Amount; else the system displays the Unamortised Fee Amount.
   • Asset Transfer Marks Amount, FAS114 Reserve Funded Amount, FAS114 Reserve Unfunded Amount. These amounts are computed by applying the pro-rata percentage of sell on the relevant origination total amounts at commitment level

   Note:

   For CLP buy line trade, if the deal type is Participation, the SLT position and the agency activities to be tracked independently for the normal participant and silent participant. In such cases, when the participation buy is entered for the first time, system does not have the corresponding CLP participation commitment in place. The FEE components should be handled manually as part of manual creation of agency and origination details.
3. Select Confirm/Reject option to indicate whether you want to confirm or reject the details specified in this screen.
   The line fee gets settled as part of line trade booking. Line fee income for the par desk is passed during the line trade and line fee expense for the origination desk is passed during the origination sell deal.

   For origination sell deal, the unamortized fee, reserve amount and contra amount are considered for PnL calculation.

   The carrying value, cost of carry and PnL are computed based on the following formulae:

   • Carrying Value = (Fund Amount Sold / Outstanding Fund Amount) * (Outstanding Fund Amount – Unamortized Fee – Reserve – Contra)
   • Cost of carry = Carrying Value – Fund Amount * Price + Unfunded amount *(1– Price) + LC amount * (1– Price)
   • Cost of Carry (PnL) = Trade amount * (1– Price) + Unamortized FEE + Reserve + Contra

   The PnL entries, in case of loss, are passed as part of trade booking, whereas the PnL entries, in case of profit, are passed as part of trade settlement for the origination desk.

   Any amendments to the CLP Sell line origination trades resulting in change of position or PnL, results in an internal reversal of the trade and the trade is re-booked with the revised details. The PnL entries of the original trade is reversed and the reserve, contra and unamortized fee amount as per the revised trade is considered for PnL computation. However, amendment from assignment to participation type or vice versa is not allowed. It has to be handled by means of reversing the current trade and re-booking the revised trade with the proper deal type.

   The amendments also get populated in the Line Trade – Origination Details screen and the amended details have to be confirmed before it can be processed further.

   A batch program in the OL module handles the re-classification of an exposure as Held for Sale (HFS), for the origination trade amounts. It identifies the list of open trades and trades booked on the current date and arrives at the re-classification break up required for funded amount, unfunded amount and LC amount for each of the origination entity. The re-classification entries are passed for the affected loans and commitment contracts as part of the TRCL event. If the cost of credit valuation is selected for the commitment underlying the trades, instead of the re-classification happening during batch, the system does the reclassification during trade booking itself.

   Note:

   • In case of inter desk trading; only the buy leg of the transaction is handed off to agency.
   • In case of the new agency tranche creation involving originations, Oracle Banking Corporate Lending automatically creates the buy trades for the origination desk to reflect the proper position in the SLT layer.