8.20 Defining Adjustment Rules

Adjustment Rules allow users to define Transfer Pricing Add-on rates that are assigned incrementally to the base FTP rate to account for a variety of miscellaneous risks such as Liquidity risk or Basis risk or to supplement strategic decision making through the use of Pricing Incentives, Breakage Charges or other types of rate adjustments.

Within both the Standard and Stochastic Transfer Pricing Processes, users can select an appropriate Adjustment rule to calculate add-on rates or breakage charges.

Add-on rates can be a fixed-rate, a fixed amount, or a formula-based rate. Breakage Charges can be a fixed percentage, a fixed amount or can be calculated on an Economic Loss basis. The adjustments are calculated and output separately from the base funds transfer pricing rate, so they can be easily identified and reported. Also, Adjustments allow you to apply event-based logic using conditional assumptions that are applied or varied only if a specific condition is satisfied.