1. Cash Flow Engine Reference Guide
  2. Cash Flow Dictionary
  3. Cash Flow Columns
  4. Current Net Rate (CUR_NET_RATE)
  5. Module Usage

8.2.35.2 Module Usage

Oracle ALM and Funds Transfer Pricing Cash Flow Calculations reference CUR_NET_RATE for the following purposes:

Interest Income (Financial Element 430) Calculation CUR_NET_RATE is used to derive the interest cash flow (income/expense) that is due to the financial institution (referred to as net). The cash flow engine uses different Interest Income calculations depending on the ACCRUAL_BASIS_CD and INT TYPE. These calculations are presented under the field heading Accrual Basis Code (ACCRUAL_BASIS_CD) and Interest Type Code (INT_TYPE). Interest income is calculated on payment dates or the record's maturity date. As the calculations indicate, after referencing the ACCRUAL_BASIS_CD, the cash flow engine applies the CUR_NET_RATE to the entire payment period (last Previous payment date to the next Current payment date). If any repricing occurred during the payment period, the cash flow engine uses the last repriced rate that occurred immediately before the next Current payment date.

Note:

Whether or not the Model with Gross Rates option has been selected in Product Characteristics (ALM) or the Transfer Pricing rule screen (Transfer Pricing), the cash flow engine always calculates the bank's income according to the CUR_NET_RATE.

Prepayments: As defined in the Prepayment Rule interface, the Cash Flow Engine compares the customer rate to the market rate when determining the prepayment rate. If the Model with Gross Rates option is not selected, the CUR_NET_RATE is the customer rate and therefore is used for prepayment calculations.

Amortization: When amortizing a record's balance, a key input is the record's customer rate. If the Model with Gross Rates is not selected, then the Cash Flow Engine uses the CUR_ NET_RATE for amortization purposes.

Depending on the NET_MARGIN_CD value, interest income is calculated differently.

Following is an explanation of how Oracle ALM calculates CUR_NET_RATE:

Before the NEXT_REPRICE_DATE, Oracle ALM uses the CUR_NET_RATE from the detail record as the net rate.

At or beyond the NEXT_REPRICE_DATE, Oracle ALM matches the REPRICE_ FREQ, INTEREST_RATE_CD, and the reprice date to the information contained in the Forecast Rates rule. This is to assign a forecasted rate. The MARGIN is then added to this forecasted base rate. Any rounding, rate caps/floors, and tease periods are applied and the resulting rate is applied to the record as the net rate.

Note:

ADJUSTABLE_TYPE_CD = 30 or 50 does not reference reprice dates.