6.3.9.3.6.3.11 Calculation Mode
The choice of calculation mode, on the Transfer Pricing Process – Calculation Selection block, not only affects the transfer rate and option cost calculation processes, but also the migration process. It determines the results that will be migrated to the Management Ledger table. If the calculation mode is set to Standard then the following results are used in migration:
- Transfer Rate
- Adjustment Rates
Consequently, the transfer pricing engine generates results for the following financial elements:
- 170 Average Transfer Rate
- 174 Average Liquidity Adjustment Rate
- 175 Average Basis Risk Cost Rate
- 176 Average Pricing Incentive Rate
- 177 Average Other Adjustment Rate
- 414 Liquidity Adjustment Charge/Credit
- 415 Basis Risk Charge/Credit
- 416 Pricing Incentive Charge/Credit
- 417 Other Adjustment Charge/Credit
- 450 Transfer Rate Charge/Credit
If the calculation mode is set to the Remaining Term, then the migration process uses the following result column:
- Tran_Rate_Rem_Term
Consequently, the transfer pricing engine generates results for the following financial elements:
- 172 Average Rem Term Transfer Rate
- 452 Charge/Credit Rem Term
Note:
Adjustment Rates are not affected by the calculation mode selection. Adjustment rates will be migrated as noted above under either Mode selection.Charge/Credit Accrual Factor: Select the Charge/Credit Accrual Factor on the Transfer Pricing Process Migration block or, define the Accrual Factor as an attribute for each Product dimension member. In case no selection is made, an Accrual Factor of 30/360 is applied.
Example of Transfer Rate Ledger Migration: Ledger migration requires you to select, among others, the following options while creating and executing the Transfer Pricing Process:
- Select both the Instrument tables and the Management Ledger table as the SOURCE tables to be processed.
- Select the transfer rate calculation (optional if previously executed), adjustment rate calculation (optional if previously executed), and the ledger migration processing options. Selecting the transfer rate and/or adjustment rate calculation options leads to the generation of transfer rates or adjustment rates for all records in the Instrument tables and for those records in the Management Ledger table for which you have defined a transfer rate with a “Ledger” source type. Selecting the ledger migration processing option instructs the application to gather balances, transfer rate, and adjustment rate information, generate credits and charges for funds and output the results to the Management Ledger table.
Oracle Funds Transfer Pricing allows you to include multiple dimensions in the Ledger Migration process. However, to keep this description simple, the following example assumes that only two dimensions, the Organization Unit dimension, and the Product dimension, are selected to generate results. The following table displays the Instrument table data for this example.
Table 6-31 Instrument Tables (for example, FSI_D_MORTGAGES)
| ORG_UNIT_ID | PRODUCT_ID | CUR_BOOK_BAL | TRANSFER_RATE |
|---|---|---|---|
| 1 | 3 | 100 | 4.00 |
| 1 | 4 | 125 | 4.50 |
| 1 | 5 | 200 | 3.00 |
| 1 | 3 | 200 | 3.00 |
The following table displays the pre-migration data in the Management Ledger table used in the example.
Table 6-32 Management Ledger Table
| ORG_UNIT_ID | PRODUCT_ID | FINANCIAL_ELEM_ID | MONTH_xx |
|---|---|---|---|
| 1 | 3 | 140 | 250.00 |
| 1 | 4 | 140 | 200.00 |
| 1 | 5 | 140 | 100.00 |
| 1 | 10 | 140 | 200.00 |
| 1 | 100 | 140 | 990.00 |
As you compare the Instrument tables and the Management Ledger table data, notice the following:
- Product IDs 3, 4, and 5 match in both tables. These Product IDs represent the simplest case of ledger migration.
- Product ID 10 does not exist in the Instrument tables. This example assumes that it is a ledger-only account that is transfer priced directly using an acceptable Management Ledger Table data source-only method (part of the assumption definition in the Transfer Pricing Rule).
- Product ID 100 does not exist in the Instrument tables. This example assumes that it is a ledger-only account that will be transfer priced using the Un-priced Account Methodology, based on Product IDs 4, 5, and 10. (This transfer pricing method is defined in the Transfer Pricing Rule.)
The ledger migration process comprises the following two broad phases:
- Instrument Tables Accumulation
- Management Ledger Table Processing
However, this example illustrates the operation of the Ledger Migration process in general and that of the virtual memory table (VMT) in particular demonstrates the following possible variations of the ledger migration process and special cases:
- Transfer Pricing Accounts with the Ledger-Only Data Source
- Transfer Pricing Un-priced Accounts
- Ledger Migration of Transfer Rates Under Remaining Term Calculation Mode