Product Code

Business Scenario

Zero Coupon Bonds are issued by corporates, Banks, Municipal or Government authorities in order to raise the funds. These funds don’t carry a fixed rate coupon payment instead it is issued at discount and redeemed at face value.

Introduction

A zero-coupon bond (also called a discount bond or deep discount bond) is a bond issued at a price lower than its face value, with the face value repaid at the time of maturity. It does not make periodic interest payments, or have so-called coupons, hence the term zero-coupon bond. Investors earn a return from the compounded interest all paid at maturity plus the difference between the bonds’ discounted price and its par (or redemption) value. The following are the important features of the bond:

Face value: A bond's face value or denomination, which is stated on the bond's front. This is usually a round figure.

Redemption date: The date on which the loan is repaid is called the redemption date or the maturity date.

Redemption value: A bond's redemption value or maturity value is the amount that the issuer promises to pay on the redemption date. In most cases, the redemption value is the same as the face value: the bond is redeemed at par.

Synopsis (ex. High level features etc.)

Risk-averse investors looking for safety of capital and who prefer a known periodic payment structure (i.e. coupon payments) for a limited time frame would be better off investing in this type of bonds.
The bonds can be issued at premium, discount or at par.
On maturity the principal amount will be repaid to the holder

Detailed Coverage

Branch Currency

The product TB01 can be used by all branches and offered in all the currencies. The restrictions are not imposed from Head office.

Customer

The restrictions are not put by the Head office to make use of this product.

All the customers are allowed to avail this product/ service.

Preferences

The product TB01 is having the following important features/properties.

Call or Put options
Redemption type
Redemption quotation
Confirmation of corporate actions
Issue and outstanding sizes
Minimum lot and trading sizes
Price quotation
Interest quotation
Allowing or disallowing the fractional quantity
Equated redemption
Security and payment currency
Issue, face value and the redemption prices
Issue date, interest start date, trading start date and the redemption dates
Interest (coupon) frequency
Interest (coupon) accrual and liquidation details
Revaluation Price code
Redemption details
Interest rate details
Tax details
MIS details
User defined fields(UDF)

MIS

The MIS details are not captured in this product.

Fields

There are no UDF details available for this product

Portfolio details

Issuer, customer and bank portfolios could be defined.
WAC, LIFO, FIFO, DM costing methods can have for each type of portfolio
Capturing Revaluation details for the portfolio
Capturing customer, currency or branch level restrictions
Capturing the discount/premium accrual details
Capturing the forward profit and loss accrual details
Defining the interest accrual details – different frequencies and types such as constant yield, exponential and straight line.
Defining the limit tracking details
Advice details

Charges / Commission & Fees

User can define Charges.

Special/Other Features

User can define tax and brokerage components for the deals.

Advices Supported

Payment/Confirmation Messages

Additional information (ex. UDF & other Special Maintenance)

In case, Bank wants to capture some other details about the deal or the parties involved, the same could be customized by way of using UDF option available at various screens.

Branch Parameter
Messaging Parameter
Local Holidays
Security Batch Maintenance
Market code and price maintenance
Security instruments
SK Location Maintenance
Security, Deal, Portfolio and Combination Products
Security Product, Deal product and Portfolio product preference classes
Portfolio definitions
Tax scheme class
Combination products