4.4 Terminate Option Contracts

This topic describes the systematic instruction to terminate the Options Contracts.

You can opt for premature termination of option contracts (both COs and IROs) which have not expired.

1. On Home page, type OTDXCTRM in the text box, and then click next arrow.

   The OT Contract Termination screen is displayed.

   Figure 4-23 OT Contract Termination

   
   Description of "Figure 4-23 OT Contract Termination"
2. On the OT Contract Termination screen, click New, and specify the fields.

   For more information on the fields, refer to the below Field Description table.

   Table 4-30 OT Contract Termination - Holiday Details - Field Description

   Field	Description
   Contract Reference Number	Specify the contract reference number or query for all active and authorized contracts. Alternatively, you can select from the list. The contract currency, name of counterparty, and termination date (the date on which you are entering the termination details) are automatically displayed. The option premium paid/received at the time of inception and the currency in which it is denominated are also displayed.
   Termination Value	Specify the termination value. The amount at which you are selling / buying back the option to / from the counterparty. This has to be a positive value.
   Contract Fair Value	You will also have to enter a positive market fair value for the contract at the time of termination; if left blank, the system picks up the latest revaluation fair value.
   Termination Settlement Date	Specify the termination settlement date in the range of values between the last life cycle event (excluded) and the maturity date (inclusive).

   If the ‘Settlement Message Days’ is greater than the difference of ‘Termination Settlement Days’ and ‘System/Business/Transaction date’, then the system triggers SGEN immediately upon authorization of the termination transaction in this screen. It is triggered during specific number of days prior to the ‘Termination Settlement Date’. This number of days is as per the ‘Settlement Message Days’ maintained in the ‘Currency Definition’ screen.

   If the ‘Termination Date’ is same as the business or transaction date, then the system triggers the TERM event immediately upon authorization of the termination transaction.

   If the ‘Termination Date’ and ‘Termination Settlement Date are both future dated, then during the BOD process, the system triggers the TERM event. Similarly, it triggers the TRST event on the ‘Termination Settlement Date’. View these events in the ‘Events’ tab of ‘OT Contract Termination’ and ‘Options Contract input’ screen.

   For hedge deals, if you have chosen to amortize termination gain / loss at the product level, then the same is amortized from the date of termination till the contract maturity date. Otherwise, the termination gain / loss is recognized as income / loss immediately on termination. Termination gain / loss for trade deals cannot be amortized.

   You can delete a saved termination application before it is authorized.

3. On the OT contract Termination Screen, click Split.

   The Split Settlement screen is displayed.

   Figure 4-24 Split Settlement

   
   Description of "Figure 4-24 Split Settlement"
4. On the Split Settlement screen, specify the details as required.
   For more information, see the section: Step 47: Split Settlements