8.9.3.5 Pricing with Balance Tiers

Repricing Patterns include the option to set rates based on the balance of the instrument being priced. This selection is optional, and users can select None, meaning there are no balance tiers needed, or they can select Current Balance. If Current Balance is selected, then users can define balance tier ranges and include different pricing details for each balance tier. This option is useful for applying pricing to products such as Savings Accounts or Money Market Accounts that pay different levels of interest-based on the account balance.

Balance tiered pricing can be applied to detailed instrument records or aggregate balances. When applying to aggregate balances, it is important to define the mix percentage of the portfolio for which the pricing will be applied. This is necessary because the original mix of accounts containing the

related balance information is lost when the data is aggregated. The mixed percentage input solves this problem. When balance tiered pricing is applied to detailed accounts, the mix percentage input is not required.

Example:

Suppose the repricing pattern is defined with the following balance tiers: Balance > 0 and < 25,000 then current rate = 0.00%, mix % = 50% Balance >=25,000 then current rate = 2.5%, mix% = 50%

Scenario 1, the instrument table contains detailed account records:

Account #1 = $10,000 Account #2 = $10,000 Account #3 = $10,000 Account #4 = $10,000 Account #5 = $10,000 Account #6 = $50,000

The resulting rate will be [($50,000 x 0.00%) + ($50,000 x 2.50%)] / $100,000 = 1.25% Scenario 2, the instrument table contains 1 aggregated instrument record:

Account #1 = $100,000

In scenario 2, the mix percentage is needed.

The resulting rate will be (0.00 x.50) + (2.50 x .50) = 1.25%