4.26.1 Amending of CUSIP/ISIN and Firm Account Mnemonic

When a new trade reference number is created as part of the TBOK event, system does not consider the commitment reduction and PIK amount of the previous version and the new trade is booked with original trade amount. Hence, during CUSIP/ISIN amendment from Loans QT, system validates incoming trade amount with the original trade amount. If these two amounts do not match, system does not process that amendment and the process status is marked as Failed in the Loans QT trade browser. You should manually mark this version of amendment as ‘Processed’ in the Loans QT trade browser and send the next version of amendment from Loans QT with the correct trade amount for successful processing.

On successful upload of the amendment from Loan QT, the latest version in the Draft Trade screen displays the original trade amount as the trade amount and the commitment reduction and PIK amount as zero.

If the reason for CUSIP/ISIN amendment from loans QT is not ChangeCusipAfterCmtRed and the box Amount change allowed during CUSIP\ISIN Amendment is selected in the Loans Parameters screen, the validation that the trade amount field of the previous CUSIP and New CUSIP should be same is relaxed.

In such cases, the system proceeds with the CUSIP/ISIN amendment without any failure, even though there is a trade amount mismatch between the previous and new CUSIP/ISIN.

Note:

If the CUSIP/ISIN amendment with different amount is received from LoansQT on a trade which is already having commitment reduction/PIK and the amendment reason is not ChangeCusipAfterCmtRed, the system does not process that amendment and the process status is marked as Failed.

However, if you change CUSIP from the Draft Trade screen, system displays an override and changes the trade amount to the original trade amount. In addition, the existing commitment reduction & PIK amount is changed to zero.

In this case, the original trade amount is computed as follows:
  • Original Trade Amount = Previous Trade Amount – Commitment Reduction Amount– PIK Amount

If the box Apply Cmt Redn/PIK for CUSIP Amendment is deselected in the Draft Trade screen and the box Amount change allowed during CUSIP\ISIN Amendment is selected in the Loans Parameters screen, the validation that trade amount should remain unchanged during CUSIP/ISIN amendment is relaxed.

In such cases, the system proceeds with the CUSIP/ISIN amendment without any failure and accepts a trade amount different than the amount in the previous version.

If the amendment reason from LQT is ChangeCusipAfterCmtRed, then system carry forwards the commitment reductions and PIK amount to the new trade. LQT sends this reason only during CUSIP amendment for which commitment reduction has already been applied for the trade.

If the new CUSIP does not exist in the agency, then the commitment reduction/PIK is not applied for the new trade even though the amendment reason from LQT is ChangeCusipAfterCmtRed. In addition, the Apply Cmt Redn/PIK for CUSIP Amendment box is deselected in the Draft Trade and Trade Online screens.

If the new CUSIP exists in agency, then system validates whether the following details between the old and new CUSIP are the same:
  • The net commitment reduction amount
  • The average commitment reduction price
  • Net PIK amount
  • The average PIK price

If any one of the above validation fails, then system does not process the trade amendment and marks the trade as Failed in the Loans QT trade browser. However, if the above validations are successful, then system reverses the existing trade and rebooks a new trade by changing the CUSIP.

System always takes the processed commitment reduction/PIK amount from agency for the old and new CUSIPs and arrives at the net commitment reduction amount/PIK by summing it all. System takes the participant share for each commitment reduction/PIK and arrives at the net commitment reduction/PIK amount. Similarly, system also computes the average reduction price by taking the commitment reduction/PIK price for the old and new CUSIPs from the processed handoffs to LQT and compares the arrived average prices.

System does not process CUSIP amendment from Loans QT if commitment reduction or PIK does not exist for the old trade, though the reason code is valid. The trade is as Failed in the Loans QT trade browser. If any trade with CUSIP amendment fails, then you can manually correct the required details to match the validations and reprocess the amendment.

Commitment Reduction/PIK is re-applied from old trade to the new trade based on the following steps:
  • Cancellation of existing position
    • System identifies the total commitment reductions applied on the trade and negates the impact by internal amendment. Each commitment reduction can be associated with a different commitment reduction price. Hence, the net commitment reduction amount is considered at an average commitment reduction price for such cancellations.
    • The total PIK amount applied on the trade is identified and its impact is negated by internal amendment.
    • Once these two processes are completed, system triggers TCNC event to cancel the position.
  • Reversing the existing trade,
    • System triggers the TREV event to reverse the existing trade.
  • Rebooking a new trade,
    • System triggers the TBOK event to book the trade with the new reference number. The new trade created have the changes only in the CUSIP/Buy-Sell indicator.
    • The commitment reduction and PIK amount applied to the old trade is re-applied on the new trade by internal amendment
The above validations are based on the commitment reduction/PIK in the agency for the old and new CUSIPs where as the application of commitment reduction/PIK to the new trade in SLT is based on the commitment reduction/PIK amount of the old SLT trade.
This above process is also followed during manual amendment in Draft Trade screen if:
  • Apply Cmt Redn/PIK for CUSIP Amendment box is selected for CUSIP amendment
Trade amendment is for changing the Buy/Sell indicator.

Note:

Within a CUSIP, only one expense code can be used for a portfolio.

Any amendment to the firm account mnemonic through LQT upload may result in change of expense code, portfolio, position identifier, and so on. When the firm account mnemonic is amended through LQT upload, the expense code, portfolio, position identifier, and so on are resolved and the respective values as per the changed firm account mnemonic are displayed in the latest version of the trade.

You can change the firm account mnemonic in the Draft Upload screen by selecting a value from the adjoining option list, which displays only the firm account mnemonics linked to the selected expense code. While amending the expense code, if there is only one firm account mnemonic linked to it, then system defaults that firm account mnemonic. However, if multiple firm account mnemonics are linked, system gives an override message to select the appropriate firm account mnemonic. Also, the draft trade is not processed if the firm account mnemonic is not selected.

This topic contains following sub-topics:

Parent topic: Amending an SLT Contract