8.2.125.2 Module Usage

Oracle ALM

Oracle ALM references RATE_INCR_CYCLE when calculating a forecasted interest rate. RATE_INCR_CYCLE sets the maximum amount (in terms of basis points) that the interest rate may increase 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 (RATE_INCR_CYCLE) or floors, and tease periods are applied, and the resulting rate is applied to the record as the record's repriced rate.

  When applying the RATE_INCR_CYCLE, the Cash Flow Engine checks for the following:

  Calculated Forecasted Rate > Previous Current Rate.

  Calculated Forecasted Rate - Previous Current Rate > RATE_INCR_CYCLE.

  If both equations are true, the rate change during the Repricing Period has exceeded RATE_INCR_CYCLE. In this case, the New Forecasted Rate is limited to the previous current rate + RATE_INCR_CYCLE.

  This is illustrated in the following example:

  RATE_INCR_CYCLE= 2.00 (200 basis points)

  Previous Current Rate= 10.00

  Calculated rate= 12.25

  12.25 > 10.00 12.25 -10.00 (= 2.25) > 2.00

  New Current Rate =10.00 + 2.00 = 12.00

Oracle Funds Transfer Pricing

Oracle Funds Transfer Pricing does not reference RATE_INCR_CYCLE because it processes cash flows within repricing periods.