8.2.4.2 Module Usage

For Oracle ALM, this field is used for Non-Maturity Behavior Pattern instruments, instruments that get repriced multiple times within a payment event, and for Annuity Instruments.

1. For Non- Maturity Behavior Pattern instrument, Accrued interest provided is used to compute the First Interest Cash Flow on the next_payment_date. If this information is available from the source system, the cash flow engine will be able to more accurately reflect the interest cash flow due to the next interest cash flow date (NEXT_PAYMENT_DATE). The Cash Flow Engine combines the ACCRUED_INTEREST amount (up to the AS_OF_DATE) with a calculated interest from the AS_OF_DATE + 1day to the NEXT_PAYMENT_DATE.

   Note:

   For Non-Maturity Behavior Patterns, the principal payments are determined based on the pattern dates, and the interest payments are determined based on the NEXT_PAYMENT_DATE and PMT_FREQ from the instrument record.
2. When an adjustable Instrument gets repriced more than once from the last payment date to as of date, Engine expects Accrued Interest from LAST_PAYMENT_DATE till as of date to be supplied in the column ACCRUED_INTEREST for a more accurate reflection of Interest Cash Flow on Next Payment Date.

   If an Instrument gets repriced more than once from the last payment date till as of date, there will be multiple repriced rates to consider for that period, and the engine would not be able to go back to historical reprice rates between last payment date and as of date. It will use the current rate (CUR_NET_RATE) of the instrument and calculate interest from the last payment date until the next payment date. This could lead to incorrect initial interest cash flow on the next payment date. As an alternate, for these scenarios, the user can provide Accrued Interest for the period from last payment date till as of date, and the engine will calculate interest from as of date ass till next payment date, and add provided Accrued interest to get total interest cash flow on next payment date.

   Note:

   If Accrued interest is provided, the engine will use it in processing for the above notes scenarios. If the instrument is FIXED RATE (adjustable_type_cd= 0), then Interest is calculated from the Last Payment date till Next Payment Date.
3. Annuity Instruments (AMRT_TYPE_CD=850) use this field to store the accrued interest from ORIGINATION_DATE of the instrument to As of Date. For Annuity, interest accumulates from origination date until Maturity.

   On each payment date, the balance of the Annuity Instrument increases with the payment amount. Additionally, if these instruments are adjustable (ADUSTABLE_TYPE_CD= 250), rates will change from Origination Date to As of Date. The engine would not be able to go back in historical dates to calculate interest, considering the change in balance or rates, from origination.

   To obtain proper interest, for both fixed and adjustable rates, it is recommended to provide accrued interest from the Origination date to As of date. When accrued interest is supplied, the cash flow engine would calculate Interest from As of date forward, and add provided accrued interest for proper total Interest cash flow population. The last payment date can be kept as the actual date as the cash flow engine will ignore the Last payment date in this case.

   If the accrued interest is not available, and if you want to calculate interest from the Origination Date, you can set the Last Payment Date = Origination Date, however, interest will vary based on past payments and or rate changes.