9.1.5 Capturing Trade-Related Information

Based on the security type, the information for security is captured.

If the Security Type is ‘Bond’ If you specified the Security Type for a class as Bond, you can indicate if Call and Put options would be available.

The issuer of a bond may also offer the option of converting the bond into shares or equities. Such bonds are referred to as convertible bonds. When defining a Security Preference Class, with the Type as Bond, you can capture this information by choosing the Convertible option.

Redemption Type

Indicate the mode of redemption. An issuer can redeem bonds in three ways:

• Series
• Quantity
• Bullet

The Redemption Mode that you specify for a class, will default to the products, that you associate with the class. When defining the redemption mode for a specific product, you can change the default redemption mode.

If the Security Type is equity

The issuer of equity can grant a holder, voting rights. You can capture this information when defining a Security Preference Class with the Security Type, Equity. The holders of all equities maintained under a product, by default, will have voting rights. You can change these default attributes when maintaining the product.

If the Security Type is Right or Warrant

Rights and Warrants can be renounced. To capture this information at the Security Preference class level, you can choose the Renouncable option.

You can define the minimum quantity in which security should be traded when building a Security Preference class. In the Lot Size field, you can enter your specifications. Your specification will apply, by default, to all products with which you associate the class (and, in turn, to all securities maintained under the product). However, this default attribute can be changed, when defining the preferences for a security product.

Quantity Quotation

Securities can be quoted in the following terms:

• Units (Example, 500 units of a security)
• Nominal (Example, securities worth USD 5000 of face value)

When building a preference class, you can enter the preferred quotation method. This method will default to all products with which you associate the class. The default value can be changed. Security, maintained under a product acquires the quotation method specified for the product.

If you choose the Units Quotation option, you can also indicate if the securities can be traded in fractional units. You can specify the fractional units in the ‘Decimals’ field. Deals entered in fractional units of securities will be validated against the decimal value that you enter here.

Price Quotation

The method in which price is quoted, is a feature of the market where a security is traded. Each market may use a particular price quotation method. The price of a security can be quoted in the following ways:

Price

in this method, the total price of the security is quoted. The total price can beexpressed as: (Face Value ± Premium or Discount) + Accrued Interest (if the interest quotation method is‘Flat’)

% Price

the price is quoted as a percentage. The same is expressed as follows:

% Price

% Price = (Market price / Face value) x 100

% Discount - in this case, the price is quoted on the basis of the discount percentage at whichthe security is bought or sold.

% Premium - in this case, the price is quoted on the basis of the premium percentage at whichthe security is bought or sold.

Premium - the price in this method is quoted on the basis of the premium at which the securityis bought or sold. That is, the differential between the face value of the bond and the price atwhich it is bought or sold.

Discount - the price is quoted on the basis of the discount at which the security is bought orsold. That is, the differential between the face value of the bond and the price at which it isbought or sold.

YTM - the price is quoted on the basis of its yield to maturity. In Oracle Banking Treasury Management, this pricequotation method applies only on Zero Coupon Bonds. The yield on a discounted instrument is measured by its yield to maturity (YTM). YTM is the yield on a security calculated from the purchase date to its maturity. The YTM changes with the market price. In case the market price increases above the straight discounted price, YTM would decrease, and vice versa. Using this quotation method, the price is calculated as follows:

The deal amount is determined based on the deal quantity and the price quotation method. Irrespective of the price quotation method used, the net result is always the same. For a Security Preference Class, you can identify a Price Quotation method. During trade, the securities maintained under a product (with which you associate the Preference Class) will, by default, be quoted in the manner that you specify. However, when maintaining a security,you can identify its price quotation method.