EIR Preferences

The EIR Preferences section enables you to select processes for Effective interest Rate (EIR) calculation. EIR is calculated using both Origination Date Cash Flows and As of Date Cash Flows and the Cash Flows are discounted over the life-cycle of the financial asset.

For EIR computation, be it the Origination Date or As of Date, ALM is used to the extent of generating the cash flows. Subsequent calculation of EIR is only within LLFP. Therefore, it is required to set up the required Static Deterministic Processes within ALM, ideally, these can stop with cash flow generation.

After this, everything is controlled from inside LLFP. You will need to schedule or execute an LLFP-Engine - this engine will internally trigger the CFE; after the CFE completes, the cashflows are picked up and EIR is computed for each account.

Note:

There can be multiple ALM processes used for Cashflow Generation in LLFP. But for EIR calculations, there must not be any common instruments, or source hierarchies, among the selected ALM processes in the EIR Preference window.