17.2.3.1 All Business Tab
Assumptions made on the All Business tab apply to both current position data and new business balances.
The common Product Characteristic fields listed on the All Business tab are as follows:
Table 17-1 Common Product Characteristic Fields List for All Business Tab
| Field | Behavior |
|---|---|
| Option Adjusted Spread |
The option-adjusted spread is used during stochastic processing only. It is an adjustment to the stochastic discount factor used in calculating market value and value at risk. Valid values for this spread are between -5.000% and 5.000%, but a value less than 2.00% is recommended for best results. For more information about the calculation of discount factors, see the Oracle Financial Services Cash Flow Engine Reference Guide. Note: BSP does not support stochastic processing. |
| Model with Gross Rates |
If your institution has outsourced loan serving rights for some of your assets (most typically mortgages), the rates paid by customers on those assets (gross rates) will be greater than the rates received by your bank (net rates). For these instruments, both a net and gross rate will be calculated within the cash flow engine and both gross and net rate financial elements will be output. The gross rate is used for prepayment and amortization calculations. The net rate is used for income simulation and the calculation of retained earnings in the auto-balancing process. Note: Modelling with gross rates is not supported in BSP. |
| Interest Credited | This option allows interest payments to be capitalized as principal on simple/non-amortizing instruments. |
| Percent Taxable |
Percent Taxable specifies the percent of income or expense that is subject to the tax rates defined in the active Time Bucket rule. This is used with the Auto-balancing option in the ALM Process rules. Percent taxable should be set up for each product and reporting currency or product and default currency combination. Note: Percent taxable is not used in BSP. |
| Currency Gain/Loss Basis |
Currency Gain/Loss Basis determines how exchange rate fluctuations are reflected in financial element results for each product and currency combination. The choices are:
See the Oracle Financial Services Cash Flow Engine Reference Guide for more information on the cash flow calculations associated with currency gain/loss recognition techniques. Note: Only used in ALM consolidated currency runs; not supported in BSP. |
| Pay Equivalent Compounding Convention | In most cases, interest rates are not adjusted for the differences in pay-basis between the quote basis of the pricing index and the payment frequency of the account to which the index is assigned. Some instruments, notably Canadian Mortgages, follow a convention that the interest rates are adjusted. In this case, the Pay-Equivalent Compounding Convention should be set to Semi-Annual Quoting Convention. For other accounts, the convention should be set to Do Not Adjust. |
| Holiday Calendar | The default value is Blank and is Enabled. This drop-down list contains the list of all holiday calendar definitions defined in the Holiday Calendar UI. |
| Rolling Convention |
The default value is Unadjusted and is Enabled, only when Holiday Calendar has been selected in the preceding field. This drop-down list contains four values: Unadjusted Following Business Day Modified following business day Previous business day Modified previous business day Actual/Un-adjusted Payment on an actual day, even if it is a non-business day. Following Business Day The payment date is rolled to the next business day. Modified following business day* The payment date is rolled to the next business day unless doing so would cause the payment to be in the next calendar month, in which case the payment date is rolled to the previous business day. Previous business day The payment date is rolled to the previous business day. Modified previous business day* The payment date is rolled to the previous business day unless doing so would cause the payment to be in the previous calendar month, in which case the payment date is rolled to the next business day *Many institutions have month-end accounting procedures that necessitate this. |
| Interest Calculation Logic |
There are two options:
|
Note:
The holiday calendar attributes can be applied directly to the instrument records for an existing business. If they are not applied on the records, the engine will use the definition from the all-business tab to apply a holiday calendar for existing and new businesses.