1. Cash Flow Engine Reference Guide
  2. Cash Flow Dictionary
  3. Cash Flow Columns
  4. Rate Decrease Limit - Cycle (RATE_DECR_CYCLE)
  5. Module Usage

8.2.123.2 Module Usage

Oracle ALM

Oracle ALM references RATE_DECR_CYCLE when calculating a Forecasted Interest Rate. RATE_DECR_CYCLE sets the maximum amount (in terms of basis points) that the interest rate may decrease in a given REPRICE_FREQ.

  • For existing business adjustable-rate records, the Cash Flow Engine matches the REPRICE_ FREQ, INTEREST_RATE_CD, and the reprice date to the information contained in the Forecast Rates Assumption Rule. This is to assign a forecasted rate. The margin is then added to this Forecasted Rate. Any rounding, rate caps/floors (RATE_DECR_ CYCLE), and tease periods are applied, and the resulting rate is applied to the record as the record's repriced rate.

    When applying the RATE_DECR_CYCLE, the cash flow engine checks for the following:

  • Previous Current Rate > Calculated Forecasted Rate.

Note:

Previous Current Rate - Calculated forecasted rate > RATE_DECR_CYCLE.

If both equations are true, the rate change during the Repricing Period has exceeded RATE_DECR_CYCLE. In this case, the New Forecasted Rate is limited to the Previous Current Rate - RATE_DECR_CYCLE.

This is illustrated in the following example:

RATE_DECR_CYCLE= 2.00 (200 basis points)

Previous Current Rate= 10.00

Calculated (raw) rate= 7.75

§ 10.00 > 7.75

§ 10.00 - 7.75 (= 2.25) > 2.00

New current rate = 10.00 - 2.00 = 8.00

Oracle Funds Transfer Pricing

Oracle Funds Transfer Pricing does not reference RATE_DECR_CYCLE because it processes Cash Flows within Repricing Periods.