1. Asset Liability Management Cloud User Guide
  2. Business Rules Administration
  3. Application Specific Rules
  4. Forecasting Rules

5.3.2 Forecasting Rules

This section covers the following topics:

  1. Product Characteristic: Product Characteristic Rules are used to define payment, pricing, and repricing characteristics for new business. These Product Characteristics are rules that are placed on MDBSS nodes to be used in Forecasting that instruct the Application on what key new business contractual and behavioral features are to be included, such as amortization, adjustable type, compounding, day count, and other key features.
  2. Forecast Balance Rules: The Forecast Balance rules module discusses modeling of new business activity through the Forecast Balance rules. Included are assumption setup and processing. Within a Forecast Balance rule, you specify the amount of new activity generated per modeling bucket on each MDBSS node within each active currency. To create a new business assumption, you select from following available forecasting methods.
  3. Pricing Margin: The Pricing Margin Rules allow users to define pricing margins (or spreads) for your products. Pricing margins are defined period by period based on your active Time Bucket definition, for each product and, potentially, each currency. Pricing margins work together with an underlying base interest rate curve to determine note rate pricing for new business volumes defined through Forecast Balance Rules.
  4. Maturity Mix: Maturity Mix rules allow you to define the term distribution of new businesses that are added during each forecast period. Maturity Mix assumptions are set at the product and currency levels.
  5. Rate Dependency Pattern: Rate Dependency Patterns allow you to set up relationships between the level of Interest Rates, Economic Indicators, or Rate Spreads and ALM forecast assumption rules.
  6. Transaction Strategy Rules: With the Transaction Strategy Rules you can test the impact of various hedging strategies that are integrated with basic scenario modeling assumptions. This functionality supports you to test the alternative strategies and their incremental impact on results.