11.9 Define Behavior Patterns

A prerequisite for transfer pricing your product portfolio is capturing instrument behavior. Payment and repricing characteristics for most instruments can be accommodated through the data attribute values in the Instrument tables. However, certain instruments may not have contractual cash flows or may have cash flows that are based on unique payment and repricing patterns that are too complex to be accommodated in the standard fields of the Instrument tables. Oracle Funds Transfer Pricing allows you to define custom behavior, payment, and repricing patterns to accurately model the unique characteristics for such instruments.

In a user-defined Behavior pattern, you can assign a unique amortization type code to a set of payment tenors, and define Principal Cash Flow amounts (via percentages) for the following instrument types:

• Non-maturity Instruments
• Non Performing Instruments
• Devolvement and Recovery of Guarantees

In Funds Transfer Pricing, three TP Methods take Behavior Patterns (non-maturity type) as inputs:

• Tractor Method
• Caterpillar Method
• Weighted Average Perpetual Method

Each of these transfer pricing methods will generate Runoff amounts corresponding to the maturity profile defined in the behavior pattern. The Tractor Method requires replicating portfolio type non-maturity behavior patterns and the Caterpillar and Weighted Average Perpetual Methods utilize standard non-maturity behavior patterns.