5.3.1.3.2 From Instrument to Management Ledger

The Instrument-to-Management Ledger is a very common use case. Such allocations are inherently aggregative, that is multiple rows from the instrument source map to each row posted to the Management Ledger.

You may aggregate your instrument-level principal balances (current book balances) to the Management Ledger to either enrich your ledger with a dimensionality that is present in your Instrument Data but not present in your initial Financial Accounting Data. For example, General Ledgers normally have more constrained dimensionality than is available in your Instrument Data. Each row of your Instrument Data may designate an owning Cost Center, a General Ledger corresponding to the Instrument's principal balance, its Product, its Customer Segment, and so on. Your General Ledger, however, may only have Dimensions corresponding to Cost Center and GL Account. In this case, although the Management Ledger Table includes columns for Product and Customer Segment, every row from your source General Ledger System populates a single value for these Dimensions as Not Applicable or N/A.

The following example demonstrates how to use a Static Driver Allocation Rule to reclassify the Management Ledger Data using Data from the Liability Instrument Table. Build a Static Driver Allocation Rule as follows:

1. Set the Source to Current Par Balance for the Liability Instrument Table.
2. Set the Allocation Operator to multiply by 1.
3. Credit Management Ledger for Financial Element 100 (Ending Balance) using <Same as Source> for every Dimension.
4. Debit Management Ledger for Financial Element 100 (Ending Balance) using <Same as Source> for the GL Account and Organizational Unit Dimensions; set every other Key Processing Dimension to N/A.

   Note:

   When allocating debit balances, you must post them using the Debit Output Tab; offsets to these debits should be posted using the Credit Output Tab. Conversely, when allocating credit balances, you must post them using the Credit Output Tab; offsets to these credits should be posted using the Debit Output Tab.

   This allocation effectively eliminates your original balances and replaces them with “enriched” data which is the data that is aligned to the Product and Customer Segment, Organizational Unit, and General Ledger Account. For more information about the aggregation rule, especially, when there are any variances between the sum of your Instrument Level Balances and your initial General Ledger Balances, see the Examples of Dynamic Allocations Section.

   Another general use case for aggregating Instrument-level Data to the Management Ledger concerns is summarizing Funds Transfer Pricing results. An example of the Liability Instrument table is as follows:

5. Set the Source to Transfer Pricing Charge/Credit for the Liability Instrument Table.
6. Set the Allocation Operator to multiply by 1.
7. Credit Management Ledger for Financial Element 450 (Transfer Pricing Charge/Credit) using <Same as Source> for every dimension.
8. Debit Management Ledger for Financial Element 450 (Transfer Pricing Charge/Credit) using <Same as Source> for every dimension except for Organizational Unit; for the Organizational Unit dimension, post to the Funding Center.

Here, the Funding Center is a Shadow Cost Center established to house all the transfer pricing offsets. The Funding Center acts as an interest rate risk management center. For a typical bank whose weighted asset duration exceeds its weighted liability duration, the Funding Center is usually a profit center (at least in a normal upward sloping yield curve environment).