1. Cash Flow Engine Reference Guide
  2. Cash Flow Dictionary
  3. Cash Flow Columns
  4. Gross Margin (MARGIN_GROSS)
  5. Module Usage

8.2.53.2 Module Usage

Oracle ALM

If the Oracle ALM Product Characteristics, Model with Gross Rates option is switched on, MARGIN_GROSS is used by the Cash Flow Engine during Cash Flow Generation.

  1. For adjustable-type records, MARGIN_GROSS is the contractual spread above/below the index that is applied throughout the instrument's life. The customer's gross rate (CUR_GROSS_RATE) is equal to the index to which the record is tied to plus a spread, which is defined by the MARGIN_GROSS field.
  2. The events of a repricing involving MARGIN_GROSS are as follows:

    At a repricing event (or a TEASER_END_DATE) for an adjustable-rate record, the cash flow engine matches the INTEREST_RATE_CD, REPRICE_FREQ, and Repricing Date of the detail record to the Forecast Rates assumption attached to the ALM Process.

    After matching the rate from the Forecast Rates Assumption Rule, if the IR Margin type cd = 1 (Percent) engine calculates Gross Margin using forecast raw rates, andMargin gross percent provided in column MARGIN_GROSS as Gross MarginC = Gross Margin % * Raw RateC. Gross Margin calculated, is added back to Raw Rate., For more information, see the Margin Type Code (IR_MARGIN_TYPE_CD).

    If IR Margin type cd =0 (Rate), provided MARGIN_GROSS amount gets directly added to Raw Rate.

    Any teases, rate caps/floors, and rounding are applied thereafter to derive the rate that is applied to the record.

    Note:

    As explained in the ADJUSTABLE_TYPE_CD section, the Cash Flow Engine does not reference Repricing Date information for ADJUSTABLE_ TYPE_CD = 30 or 50.
  3. The Repriced Rate, defined in Step 3, equals the coupon rate that is used for amortization and prepayment purposes only. Interest Income (financial element 430) is still derived from the CUR_NET_RATE + MARGIN.

    Note:

    If the Model with Gross Rates option switched off (it is typically off), the cash flow engine uses the CUR_NET_RATE and MARGIN for amortization, prepayment, and interest income calculation purposes.

Transfer Pricing

MARGIN_GROSS is not used by Oracle Funds Transfer Pricing.