11.6.6 Transfer Pricing Process and Migration Options

The purpose of the Ledger Migration process is to generate dollar charges or credits for funds provided or used for a combination of dimensions. The information necessary to generate these charges or credits (through transfer rates, adjustments, and option cost processing) originates from the Instrument Tables and the results are inserted into the Management Ledger table and are available for use in the calculation of profitability and risk measures. Within the Transfer Pricing Process definition screen, on the "Migration" block, users can select from two options for the charge/credit method:

  • Account Level: The Account Level method sums the charge/credit amounts computed at the individual instrument level (based on the instrument's current or average book balances) and groups the results by the set of selected dimensions and migrate the amounts, together with the weighted average transfer rates to the Management Ledger table.
  • Ledger Level: The Ledger Level method computes the weighted average transfer rates from the instrument data and will migrate these values to the Management Ledger table. The migration process then multiplies the weighted average transfer rates by the Ending or Average balances on the Management Ledger Table to arrive at the TP charge or credit amounts.

The following Migration – Charge/Credit Methods are available:

With both methods, the following rows are created for each product (and a combination of selected dimensions). An offset entry to the funding center (offset org unit) is also created.

When Transfer Rate is selected (based on Standard or Remaining Term option):

  • Financial Element 170, Average Transfer Rate
  • Financial Element 450, Charge/Credit
  • Financial Element 172, Average Remaining Term Transfer Rate
  • Financial Element 452, Charge/Credit Remaining Term

When Adjustments are selected (based on the population of noted adjustment type):

  • Financial Element 174, Average Liquidity Adjustment Rate
  • Financial Element 414, Liquidity Adjustment Charge/Credit
  • Financial Element 175, Average Basis Risk Cost Rate
  • Financial Element 415, Basis Risk Cost Charge/Credit
  • Financial Element 176, Average Pricing Incentive Rate
  • Financial Element 416, Pricing Incentive Charge/Credit
  • Financial Element 177, Average Other Adjustment Rate
  • Financial Element 417, Other Adjustment Charge/Credit

When Option Costs are selected: (based on Standard or Remaining Term option):

  • Financial Element 171, Average Historic Option Cost
  • Financial Element 451, Historic Option Cost Charge/Credit
  • Financial Element 173, Average Current Option Cost
  • Financial Element 453, Current Option Cost Charge/Credit

When All in TP Rate is selected (based on formula for all in TP rate):

  • Financial Element 169, Average All in TP Rate
  • Financial Element 421, All in TP Charge/Credit

Overview of the Ledger Migration Process:

  • 169 - Average All in TP Rate
  • 421 - All in TP Charge/Credit

Oracle Funds Transfer Pricing then writes the result as dollar charges/credits to the Management Ledger table using the following financial elements:

  • 421 - All in TP Charge/Credit

Note:

For a given combination of Organizational Unit and Product dimensions (or any other combination of dimensions), only one row should exist for the associated rate (170 - 177) and charge or credit amount (414-417 or 450-453). An offset posting to the Offset Org Unit or Funding Center, is also made for each posting.

Oracle Funds Transfer Pricing provides great flexibility in the Ledger Migration Process and the generation of corresponding charges and credits. Users can specify Ledger Migration for a combination of an extended list of dimensions, including organizational unit, product, channel, GL account, geography, or any other dimension that is part of the key dimension set.

Note:

Only the key dimensions are available for inclusion during the migration process. This is because Oracle Funds Transfer Pricing displays only the processing key dimensions in the user interface.

You can choose to migrate the Transfer Rate, Adjustment Amounts, or the Option Costs, within the respective Standard or Stochastic Transfer Pricing Process.