1.5 Settlement Netting Agreement

This topic provides systematic instruction to settlement netting agreement.

Netting Agreements could be defined for a settlement party with the agreed preferences for Settlement Netting using Settlement Netting Agreement maintenance. This would be a record of the formal agreement between the two parties for net settling cashflows to be exchanged between them. These preferences defined for a settlement party would be applied by default for all net settlement transactions using the netting agreement.

The details that could be captured for Settlement Netting Agreement include:
  • A unique code and a brief description for the Agreement.
  • Basic details about the Agreement like Settlement Party, Effective Date, Document Type and Version, etc.
  • Applicable Modules, Deal types and Currency pairs.
  • Netting Schemes to be used for different components, settlement party and currencies.
Netting Agreements are defined for a branch and settlement party.
  • All the modifications to the agreement configuration would be logged for audit trail purposes.
  • Auto authorization could be enabled for this function.
  1. On the Home screen, type NTDSNAGM in the text box, and click Next.
    The Settlement Netting Agreement screen displays.

    Figure 1-5 Settlement Netting Agreement


    Description of Figure 1-5 follows
    Description of "Figure 1-5 Settlement Netting Agreement"

  2. On the Settlement Netting Agreement screen, Click New.
  3. On the Settlement Netting Agreement, Specify the details as required.

    Table 1-5 Settlement Netting Agreement - Field Description

    Field Description
    Agreement Code Specify the unique code that identifies this Netting Agreement throughout Treasury application
    Agreement Description Enter the suitable description for the agreement, preferably unique description to identify easily. This description is displayed along with the code.
    Settlement Party Select the counterparty to this netting agreement.
    Agreement Date Select the date on which this agreement was concluded between the parties.
    Effective Date Select the date from which this agreement can be used for settlement.
    Expiry Date Select the date up to which this agreement can be used for settlement. If Expiry Date is not specified, then the agreement can be used till it is closed.
    Document Type Select the document template type used for this agreement.
    Document Version Select the version of the document template type used for this agreement.
    Remarks Enter notes about the agreement intended for bank’s internal reference.
    Module Displays the treasury modules for which this agreement can be used for net settlement of cashflows.
    Deal Type Displays the deal type for which this agreement can be used for net settlement of cashflows.
    Deal Product Displays the deal product for which this agreement can be used for net settlement of cashflows.
    Currency 1 Displays the base currency of the currency pair for which this agreement can be used for net settlement of cashflows.
    Currency 2 Displays the counter currency of the currency pair for which this agreement can be used for net settlement of cashflows.
    Portfolio Displays the portfolios for which this agreement can be used for net settlement of cashflows.
    Applicable From Displays the date from which this agreement can be used for settlement of the deals booked in the selected module, deal type, etc.
    Applicable To Displays the date up to which this agreement can be used for settlement of the deals booked in the selected module, deal type, etc. If Applicable To date is not specified, then the agreement can be used till it is closed.
    Netting Schemes This sections has multiple combinations of cashflow Component Type, Component and Settlement Currency selected Netting Scheme would be applied, when this agreement is used for net settlement.
    Component Type Displays the type of cashflow component for which the selected Netting Scheme would be applied, when this agreement is used for net settlement.
    Component Displays the cashflow component for which the selected Netting Scheme would be applied, when this agreement is used for net settlement.
    Settlement Currency Displays the settlement currency for which the selected Netting Scheme would be applied, when this agreement is used for net settlement.
    Netting Scheme Displays the netting scheme that would be applied, when this agreement is used for net settlement for the selected component and settlement currency.
    Net Pay/Receive Displays whether netting of payments and receipts is allowed when the selected Netting Scheme is used for settlement.
    Netting Across Displays the level, across modules, deal types, products or deal, up to which netting of cashflows is allowed when the selected Netting Scheme is used for settlement.
    FX Netting Type Displays whether netting of FX cashflows across currency pairs is allowed when the selected Netting Scheme is used for settlement.
    Default Displays that the selected Netting Scheme would be used by default for net settlement any cashflows in the selected Settlement Currency with the Settlement Party of the agreement, irrespective of the component type or component.

Parent topic: Overview