31.13 Exceptions to Typical Calculations

There are two exceptions to Mid-Period Repricing Computations:

• Teased Loan Exception: When the TEASER_END_DATE is the first Repricing Date, it overrides all other values for LAST_REPRICE_DATE and NEXT_REPRICE_DATE. During the Teased Period, then, the Computed Last Repricing Date equals the Origination Date and the Computed Next Reprice Date equals the TEASER_END_DATE. Consequently:
• • If the TEASER_END_DATE is greater than the AS_OF_DATE, the Mid-Period Repricing does not apply. The logic to compute the Transfer rate is based upon the term equal to the TEASER_END_DATE - ORIGINATION_DATE, date equals the ORIGINATION_DATE.
  • When rolling backward by Repricing Frequency, if the TEASER_END_DATE is greater than the Computed Last Repricing Date, Transfer Pricing computes the transfer rates for that period based on the teased loan exception.
• Origination Date Exception: While performing Mid-Period Repricing Computations, Oracle Funds Transfer Pricing Cloud Service assumes that if the origination date occurs during the processing month, the calculation of the number of days (used for weighting) originates on the first day of the month. This is a safe assumption because the PRIOR_TP_PER_ADB value shows this instrument was not on the books for the entire month. This impact is measured because the PRIOR_TP_PER_ADB value is used in computing the weighted average transfer rate. If Oracle Funds Transfer Pricing Cloud Service were to shorten the number of days (as in the weighted average calculation), it would double-count the impact.

The following table displays a situation where the Origination Date occurs during the processing month:

Table 31-6 Origination Date Exception: An Example

Period 1	Period 2	Period 3
Nov 1 - Nov 10	Nov 11 - Nov 20	Nov 21 - Nov 30
	Loan is originated	Loan reprices
Loan Balance = 0	Loan Balance = 100	Loan Balance = 100
Transfer Rate = 0	Transfer Rate = 6%	Transfer Rate = 8%
Days = 10	Days = 10	Days = 10
Weighting Balance = 50 = PRIOR_TP_PER_ADB	Weighting Balance = 50 = PRIOR_TP_PER_ADB	Weighting Balance = 100 = CUR_TP_PER_ADB

Note:

The cumulative average daily balance for period 1 plus period 2 is 50.

Considering the origination date exception, the Mid-Period Repricing calculation is done as follows:

(6% * $50 * 20 days) + (8% * $100 * 10 days) / ($50 * 20 days + $100 * 10 days) = 7%

If period 1 was not taken into account, the result will be, (6% * $50 * 10 days) + (8% * $100 * 10 days) / ($50 * 10 days + $100 * 10 days) = 7.33%, which is incorrect.