2.8.8 Netting Preferences

User can define the settlement netting preferences for the agreement if the agreement is used for Settlement Netting purposes. Netting tab is enabled only if ‘Settlement Netting’ is checked for Agreement purpose in Main tab, for this agreement.

• Can define the preferences for netting securities transferred for the transactions linked to the agreement
• Can define the preferences for netting cash components of the transactions linked to the agreement
• Can select multiple schemes for net settlement of different cash components applicable for the modules linked to the agreement

Click the Netting tab in the Master Agreement Maintenance screen to open this screen.

Figure 2-26 Master Agreement Maintenance - Netting

Description of "Figure 2-26 Master Agreement Maintenance - Netting "

The following table describes the fields captured for netting preferences for the agreement.

* indicates mandatory fields.

Table 2-15 Master Agreement Maintenance - Netting

Field	Description
Netting Product	Select the Margin-Netting Product, to which this agreement is linked. Only products enabled for Settlement Netting is displayed for selection
Product Description	Displays the description of the netting product selected.
Cash Netting	Group of fields to capture the preferences to be used for netting cash components of the transactions linked to this agreement. Applicable, only if “Cash” is checked for the Netting product selected
Net Cash	Select the default preference for netting cash components of the transactions linked to this agreement. Defaulted to the value selected for this preference in the Netting product selected If not selected (‘’), then cashflows will not be netted for the transactions linked to the agreement If ‘Net’ is selected, then both cashflows paid and received is netted together, for the same component across multiple transactions linked to the same cash netting scheme If ‘Aggregate’ is selected, then cashflows paid is netted and cashflows received is netted separately, for the same component across multiple transactions linked to the same cash netting scheme
Netting Tenor	Select the default preference for netting cash components of the transactions linked to this agreement, having any tenor or same tenor. Applicable and mandatory only if Net Cash selected is ‘Net’ or ‘Aggregate’ Defaulted to the value selected for this preference in the Netting product selected If ‘All’ is selected, then the cash components is netted across transactions having any tenor If ‘Same Tenor’ is selected, then the cash components is netted only across transactions having same tenor If ‘Same Deal’ is selected, then only cash components of the same transaction is netted
FX Netting Type	Select the default preference for netting Foreign Exchange (FX) transactions linked to this agreement. Applicable and mandatory only if Net Cash selected is ‘Net’ or ‘Aggregate’ and modules selected for the agreement include ‘FX’ Defaulted to the value selected for this preference in the Netting product selected If ‘Pair-Wise’ is selected, then cash flows of only those FX transactions, linked to this agreement and traded with the same currency pair is netted together If ‘Currency-Wise’ is selected, then cash flows in the same currency is netted across all the FX transactions linked to this agreement, even if they are not booked with the same currency pair
Cash Netting Schemes	Select the list of settlement schemes to be used for netting cash components, for the transactions linked to this agreement. Schemes can be defined for multiple combinations of the criteria for different cash components, by clicking the ‘+’ button A combination defined earlier can be removed by clicking on ‘-’ button At least one default scheme should be defined separately with all the criteria selected as ‘ALL’, for each module selected for the agreement
Module	Select the Module for which this netting scheme is applicable, for the transactions linked to this agreement. This field cannot be amended after authorization of the agreement Only those modules, that are selected for the agreement is displayed
Settlement Currency	Select the currency of settlement of the cash component(s) of the transactions linked to this agreement, for which this netting scheme is applicable. This field cannot be amended after authorization of the agreement All components with the selected settlement currency is netted together If not specified, ‘ALL’ is set by default indicating that all cash components is netted together, irrespective of the currency of settlement
Deal Type	Select the standard deal type of the transactions linked to this agreement, for which this netting scheme is applicable. Can be one of the standard deal types maintained using ‘Treasury Static Type Maintenance’ function with type as 'DEAL_TYPE’ This field cannot be amended after authorization of the agreement All components for the transactions with the selected deal type are netted together If not specified, ‘ALL’ is set by default indicating that all cash components are netted together, irrespective of the deal type of the transactions
Product Code	Select the product belonging to the selected module, for which this netting scheme is applicable. This field cannot be amended after authorization of the agreement All components for the transactions with the selected product is netted together If not specified, ‘ALL’ is set by default indicating that all cash components is netted together, irrespective of the product of the transactions
Component Type	Select the type of cash components, for which this netting scheme is applicable. This field cannot be amended after authorization of the agreement All components belonging to the selected type is netted together If not specified, ‘ALL’ is set by default indicating that all cash components is netted together, irrespective of the type of the components
Component	Select the cash component belonging to the selected component type, for which this netting scheme is applicable. This field cannot be amended after subsequent authorization of the agreement All cashflows for the transactions with the selected component is netted together If not specified, ‘ALL’ is set by default indicating that all cashflows is netted together, irrespective of the component
Settlement Scheme	Select the settlement scheme through which the cash components is netted, for the transactions linked to this agreement and satisfying the criteria defined for this netting scheme. All cash components across all the transactions linked to the same agreement and satisfying the criteria defined is netted together, based on Net Cash, Netting Tenor, and FX Netting Type preferences Settlement happens in the scheme currency for the net amount calculated Same settlement scheme can be used for multiple combinations of the criteria for different cash components If this field is amended after authorization, the changes are applied only for the subsequent netting and not applied to the past netting in retrospection
Scheme Currency	Displays the currency of the settlement scheme, in which the settlement happens. If the Scheme Currency is different from the Settlement Currency, then the cash component amount to be settled is converted into Scheme Currency equivalent, using the exchange rate preferences configured for the Settlement Scheme selected
Ignore Due Date	Indicate whether due date of the cash component can be ignored for netting the cash flows. If checked, then all cashflows are netted together, irrespective of the due date of the cash components If unchecked, then only those cash flows having the same due date are netted together
Include Unconfirmed Flows	Indicate whether confirmation status of the cash component should be considered for netting the cash flows. If unchecked, then all cashflows are netted together, irrespective of the whether the cashflow amount is confirmed or unconfirmed If checked, then only those cash flows that are confirmed are considered for netting