2.1.1 Setup Fund Rules

This topic provides information on setting up fund rules section.

In Oracle FLEXCUBE Investor Servicing, each fund that the AMC wishes to maintain can be entered into the system database.

Oracle FLEXCUBE Investor Servicing enables you to specify a set of logically grouped guidelines for each fund, which pertain to aspect of the method of operation of the fund. Each of these logically grouped sets of guidelines is distinct and unique, and is called a fund rule.

For each fund, you can maintain a complete set of such guidelines or fund rules. The options chosen by the AMC in specifying each of the rules will be directives to the system for the operation of the fund. Therefore, Oracle FLEXCUBE Investor Servicing processes each transaction in a fund according to the fund rules that you maintain for the fund.

Whenever you need to refer to any or all guidelines about the operation of a fund, you can refer to the fund rule records that you have maintained for the fund.

Some fund rules are mandatory and you must set them up before you authorize a fund, while others are optional, and you may be set up as and when required.

There are many different fund rules that may be defined for a fund and these may be enumerated as follows:

Table 2-1 Fund Rule - Description

Fund Rule	Description
Fund Demographics	This is the entry point for setting up a fund in the system. The Fund name, Fund ID, the base currency for the fund, the country that the fund is based in and the effective date for the fund rules may be set here. You can also designate the Type and the Class that the fund comes under. You can specify the AMC that operates the fund. This is a mandatory fund rule, and you must set it up before you authorize a fund.
Corporate Actions	In this section, you can specify the rules that will govern the pattern of processing corporate actions for the fund. This includes the income distribution by the fund to its unit holders. These rules include the Dividend Declaration and Payment frequencies, the Default Distribution Mode, Tax Deducted at Source (TDS) details, the lead times for the different dates such as the Book Closing, Freeze Holdings, and Dividend Payment dates. Setting up this rule is optional, and you can set it up for a fund as and when required. It is recommended that you set it up before you authorize the fund. For corporate actions such as dividend, you can set up individual, separate rules for processing cash dividend as well as stock dividends for the same fund.
General Operating Rules	In this section, you can designate the rules that will govern the operation of the fund. You can specify the frequency at which the fund price is declared. You can also designate a fund to have automatic redemption. This is a mandatory fund rule, and you must set it up before you authorize a fund.
Shares Characteristics	These rules govern the features of shares that are issued in the fund. You can designate a fund as scrip-less fund or a scrip-based fund that issues certificates. The limits on the number of unit holders that must be allowed to subscribe to the fund and the ceiling on the capital that may be issued by the fund may also be specified in this rule. You can set up the standard lot, the maximum and minimum certificate denominations and the issue number range. You can also set up the limits for Foreign Investors in the fund, either as an amount or as a percentage of the issued share capital. This is a mandatory fund rule, and you must set it up before you authorize a fund.
Transaction Processing Rules	These rules govern the parameters by which each transaction is processed in the fund, and these rules may be set up according to each transaction type. These parameters typically include the ranges of volumes allowed for each transaction type, the range of periods and times for the processing of a transaction, the processing policy for each transaction type and the base price definition types and factors. You may enable or disable a transaction type as the requirement may be. This is a mandatory fund rule, and you must set it up before you authorize a fund.
Setting up the Amount/Units Limits for Investor Categories	The limits in the volume of investment for each category of investors can be setup using this fund rule. This is a sub-rule that you can maintain as part of the Transaction Processing Rules rule.
Setting up the Amount/Units Limits for Communication Modes	The limits in the volume of investment for each communication mode can be set up using this fund rule. This is a sub-rule that you can maintain as part of the Transaction Processing Rules rule.
Setting up the Amount/Units Limits for Investment and Standing Instructions	The limits in the volume of investment for initial investments and standing instructions can be set up using this fund rule. This is a sub-rule that you can maintain as part of the Transaction Processing Rules rule.
Fund Load Setup	These rules govern the ways in which an applicable fee or incentive will impact the processing of transactions in the fund. Setting up this rule is optional, and you can set it up for a fund as and when required. It is recommended that you set it up before you authorize the fund.
Fund Formula Setup	This fund rule facilitates the specification of any expression that will be used in estimating the base prices or the Net Asset Value for any transaction type. Setting up this rule is optional, and you can set it up for a fund as and when required. It is recommended that you set it up before you authorize the fund.
Fund Residency Restriction Setup	This fund rule enables the Fund Manager to make restrictions with respect to the nationality of the unit holders who subscribe to the fund. This is a mandatory fund rule, and you must set it up before you authorize a fund.
Fund Sale Country Setup	If some funds are not to be opened for investment in specific countries, restrictions can be made in respect of that country, identifying that the fund cannot be sold in that country. This is a mandatory fund rule, and you must set it up before you authorize a fund.
Fund Transaction Currencies Setup	The Fund Manager can also identify the currencies that the fund can transact in, and restrict the use of other currencies for transactions. Therefore, each Fund can have a set of identified currencies that may be used as transaction currencies, and other currencies may be disallowed for transactions. This is a mandatory fund rule, and you must set it up before you authorize a fund.
Specific Fund Price Date Setup	You can use this fund rule to specify specific price dates to be operable at a specific frequency for certain transaction types, for a fund. Setting up the specific price date is an optional fund rule, and may be edited, authorized or amended just as the other fund rules.
Amount Limits for IRA Transactions	For funds that form part of the investment portfolio of retirement products that you offer to investors, and in which you have opted to allow investment into retirement accounts (IRA), you can define the limits for the different kinds of transactions into such accounts that would apply to the fund. This is an optional rule, and must be maintained only in the event of IRA investment being allowed for the fund.
Additional Information Setup	You can also maintain additional information for a fund, if additional information heads have been maintained for the AMC, to be applicable for funds. Though maintenance of additional information is not, strictly speaking, a fund rule, you can only maintain the information through the Fund Demographics screen, when you are setting up a fund, along with all the other fund rules.