1 Overview of Foreign Exchange Module

Foreign Exchange (FX) transactions involve one party purchasing a quantity of one currency in exchange for paying a quantity of the other.

When goods are traded across boundaries, the selling and the buying firms prefer to receive or pay consideration in a currency of their choice. Firms, as well as governments, borrow foreign currency internationally. When they trade or borrow, multiple currencies come into play. There has to be a market that enables participants to buy and sell currencies in a way that they can convert the outflow and inflow into the currency of their choice. Such currency trading takes place in an FX market.

The main participants of the FX Markets are:

• Central banks
• Commercial banks
• Corporate players
• Speculators (such as investment banks, hedge funds etc.)
• Retail Customers to a small extent.

Banks have dealing rooms where dealers do FX transactions. The deals can be struck either through telephone or through the use of sophisticated dealing systems such as Reuters, Fusion Kondor. Smaller banks also book FX transactions through brokers.

Once the deal is struck, a Deal Slip is generated which contains basic details of the deal. The Treasury Back Office uses the information in the Deal Slip for

• Processing
• Accounting
• Settlement and
• Messaging

The FX module of Oracle Banking Treasury Management is a back office system for the treasury. Using this module, you can upload the forex deals entered into in the dealing room to Oracle Banking Treasury Management for:

• Further processing
• Messaging
• Accounting

You can also, enrich deals with information relating to settlements, brokerage, and tax on brokerage etc. The upload facility offered in Oracle Banking Treasury Management eliminates the discrepancies that could creep into the deal information between the dealing room and the back office system.

Further, not only can you download the deals stored in the Oracle Banking Treasury Management to other systems, but you can also transfer the Nostro balances, etc., to the dealing room system. The Oracle Banking Treasury Management allows amendment in all fields in an FX contract, including counterparty and currencies.

This topic has the following sub-topics:

• System Setup
  This topic provides the systematic instructions for system setup.
• Generic Attributes for Foreign Exchange Deals
  This topic provides the systematic instructions are to classify the different foreign exchange deals.
• Specify Brokerage
  This topic describes the maintenance of the brokerage list.
• Define tax details
  This topic describes the tax details definition.
• Track limits
  This topic describes the track limits maintenance.
• Settlements of FX Contracts
  This topic describes the settlements of FX deals through fund transfer.
• Retrieve FX deal Information
  This topic describes the information retrieving process relating to foreign exchange deals in form of reports.