1. Over the Counter Options User Guide
  2. Process Over the Counter Option Instruments

4 Process Over the Counter Option Instruments

This section of the manual tells you how to enter details of an interest rate option (IRO), currency option (CO), or swaption transaction in Oracle Banking Treasury Management. This includes the definition of schedules and performing other functions in the lifecycle of a contract, like a reassignment, amendment, and reversal.

Let us briefly look at the workflow of the OT module.

You need to maintain the basic module-specific information that is necessary for the successful functioning of the module. This is over and above the static data, maintained as part of core services that are used by several modules in Oracle Banking Treasury Management. This information includes the maintenance of:

  • Branch Parameters, which govern the processing of OT transactions at a particular branch of your bank
  • Contract Fair Value details, for revaluation of options
  • Limit tracking details, for tracking counterparty exposure due to purchased options

The next step in the process is the creation of OT products. Products help you group or categorize contracts, which share broad similarities. You have to associate a product type with each of the products that you create. The product inherits all the attributes of the type. While defining the product, you associate charge and tax classes with it, specify branch and customer restrictions, maintain MIS details, and specify preferences for the product.

Under each product that you define, you can enter specific contracts (transactions). By default, a contract inherits the attributes of the product to which it is associated. This means that you do not have to define the attributes that default from the product every time you enter a contract involving the product. However, you can change some of the attributes to suit the contract you are defining.

This topic contains the following sub-topics:

  • OT Contract
    This topic describes the systematic instruction to process details of OT Contracts, holiday validation assumptions, settlement method for currency options, and settlement method for IROS.
  • Display OT Contract Details
    This topic describes the instructions to capture the Options Contract Summary details.
  • Maintain Manual Knock-In Knock-Out
    This topic describes the systematic instruction to process the Manual Knock-In Knock-Out screen.
  • Terminate Option Contracts
    This topic describes the systematic instruction to terminate the Options Contracts.
  • Upload Options Contracts
    This topic describes the upload options contracts for amendment.
  • Exercise Option
    This topic describes the systematic instruction to exercise specific styles of interest and currency options.
  • ISDA Confirmation
    This topic describes the details to capture the confirmation check for the OT deal events. Using this ISDA check at deal product level, the trigger of an authorized event at contract level would trigger creation of a record in this screen with details used from the contract.
  • Rate Fixing
    This topic describes the Rate fixing details in treasury branch parameter maintenance, treasury rate fixing Maintenance, product definition, transaction input, and rate fixing process.
  • Defer the Contract Expiry
    This topic describes the defer contract expiry.
  • SGEN Messages Generation
    This topic describes the SGEN Messages generation.