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MONEY MARKET
This module is designed for the multicurrency assets and liabilities transactions of a commercial bank. The main deal types handled can be classified as follows:
Placements/Loans
A contract to lend a fixed amount of money in a specific currency. From the view of BDA, it’s a lending. The interest rate can be agreed for the complete period of the contract or can be dependent on any base rates such as prime rate, base rate, deposit rate, call rate etc.. The period of time can be fixed i.e. the contract is for an agreed length of time or can be on a ‘call’ or ‘notice’ basis.
Deposits
A contract to deposit with BDA a fixed amount of money in a specific currency. From the view of BDA, it’s a borrowing. The interest rate and the period of time can be agreed on the same basis as previously stated for Placements/Loans.
Fiduciary Deposits/Placements
A transaction whereby the bank acting as a fiduciary or agent receives a deposit and places the funds at the direction of the depositor. The bank earns a commission for acting as the fiduciary agent. These off-balance sheet transactions are handled in much the same way as the two previous products with some additional facilities such as:
1. The user will only maintain one side of the transaction (Deposit) i.e. the associated placement is automatically generated and maintained by the System. 2. Interest payment facilities are provided at the group level, i.e. the Fiduciary Bank level within currency and notice period. 3. Fiduciary commission rates can be defined on tables or specifically input at the contract level.
Sundry Assets and Liabilities
Which will allow a record to be made at the customers level of miscellaneous items due to/from customers.
FEATURES:
1. Various input stages for the recording of the deal data. A first input level will allow primary deal information to be entered by the dealer while the settlement details can be entered at a second input level by the back-office. Primary details will be restricted to a minimum enabling the dealer to enter the data in a matter of seconds but still providing sufficient information to allow real time updates of all the relevant positions (Limit Exposure, Cash Flow, Liquidity etc.).
2. All deal types are handled in local and foreign currencies. i.e. contracts can be denominated in any currency. It must be noted however that all deal types will be ‘non-positional’ in the sense that all entries will be generated in the currency of the contract.
3. Interest accruals can be performed on a daily, weekly, monthly or on a requested basis.
4. Fixed, Libor, Prime, Base, Call and any other interest rate are handled.
5. Fixed and Call/Notice maturity are allowed. Upon the liquidation of a notice transaction, the Application will verify that the notice period has been duly respected and any shorter notice will require an override.
6. Automatic production and delivery of confirmations, advices and payments. Confirmation and Broker notices received may be matched to deal inputs and verified or unconfirmed deals extracted using a special confirmation enquiry facility.
7. Multi-settlement conditions. Each contract contains the payment conditions applicable to both disbursement and receipt of funds. Different conditions between Principal and Interest may be recorded and Interest on Call and Notice transactions can be liquidated at various times during the life of the deal.
8. Interest accrual adjustments, due to back value changes in the interest rate, are handled automatically by the Application up to the last interest due date.
9. Tax on interest. On deposit contracts, a tax rate or key can be specified to allow automatic deduction of the tax from the interest amount on payment date. This tax amount will be kept in a liability account until its liquidation to the local Authorities.
10. Interest payments will always be liquidated in arrears. i.e. on maturity date or on intermediary interest payment date(s) defined in the contract. Discounted transactions will be handled by LD Module.
11. Detailed statistics, in respect of broker positions and brokerage are available on the number of transactions per broker. Automated brokerage calculation and processing is controlled by the BROKER file. A rollover function is available which will enable the User to renew existing contracts at maturity when the new conditions that will apply to a contract are known in advance of the maturity date of that contract.
12. The System provides automatic liquidation of all maturing contracts on the maturity date (regardless of whether or not funds are received on the due date in respect of placement contracts).
13. The System also provides a Payment/Receipt function which enables the User to instruct the System to make a payment out of a contractor conversely, to inform the System that money has been received on a contract outside a normal due date e.g. a prepayment on a loan.
The Money Market Module is an important source of detailed management information for the production of comprehensive general reports such as:
. Cash Flow
. Liquidity Position
. Nostro position
. Interest Rate Exposure
. Interest rate sensitivity ('what if' - situation)
The System provides comprehensive on-line inquiry and reporting facilities such as:
- Activity Journal
- Limits
- Exception Report including deals for which settlement details are incomplete
- Maturity Report
- Confirmations outstanding and Chasers.
- Broker Notices missing
- List of all deals by:
. customer
. currency
. maturity date
. amount
. interest rate
. account officer
. department
. country
Attention: It’s impossible to reverse a transaction already matured. It’s impossible to input today a transaction whose maturity date is yesterday, except that yesterday is a holiday.
1. Fixed Placement Category: 21075 Bank Placement (Placements – Dépôts)
XXXX(TAKEOVER) MONEY MARKET,PLA SEE REF MM9733200001
***** MONEY MARKET PLACEMENT ***** ------------------------------------------------------------------------------ 4 Deal Date : 28 NOV 1997 1 Counterparty : 400101 2 Currency : USD 3 Principal : 10,000,000.00 5 Value Date : 28 NOV 1997 6 Maturity Date : 28 JAN 1998 10 Interest Rate : 5.75 9 Interest Basis: B 366/360 ------------------- Settlement instructions ---------------------------------- 22 Drawndown Acct: USD149990100 REPRISE - MONEY MARKET USD 23 Prin.Lid.Acct: 400101503331 28 Int.Lid.Acct : 400101503331 39 Delivery Link : 1 DEFAULT
Field22 Drawndown Account: similar to LD, here because of Takeover, we use USD149990100 to avoid double credit customers’ accounts. Normally when inputting a new LD transaction this field should be filled as e.g. 400101503331. It identifies the account number (either the source or destination account) of the Drawdown Amount to be used on the Value Date.
The customer may request delivery of funds either within the Bank (when the Customer actually maintains an account relationship with the Bank) or externally at another bank. Thus the User could need to enter appropriate information in the fields existing for this purpose (see Payment fields). The GLOBUS System contains details within the SEC.ACC.MASTER file found through using the Portfolio number. If no default account is found the CUSTOMER.CCY.ACCT record is read for the customer. If no account account is found the details within the AGENCY file will be used to determine if there are specific auto-routing instructions to ensure delivery to the Beneficiary Customer in the specified currency. If this information does not exist, manual input will be requested. If the account, through which delivery is to be made, is not known the User can choose to enter one digit (from 1 to 9) which will identify a text (defined in text file with title LMM.TEXT) to be printed on the confirmation sent to the customer. This will also result in the funds being applied to a suspense account in the applicable currency.
Field23 Prin.Lid.Account: Identifies the account number where entries are made for the reimbursement of the principal at liquidation or maturity date. If the account through which liquidation is to made is not known, then the User should enter a numeric code (from 1 to 9) which will identify the text (defined in text file with title LMM.TEXT) to be printed on the confirmation sent to the client. If the actual Principal liquidation account is not entered before the maturity date, the funds will be applied to a suspense account in the applicable currency and an exception list will be produced for manual handling of the liquidation of the account. Another example relating to the use of this suspense account will be the case where a customer requests a more complicated dispersement (separate amounts with different destinations). Manual handling of the liquidation of the Principal must then be used.
Field28 Int.Lid.Acct: Identifies the account number where entries are made for the reimbursement of the Interest of Deposit type contracts. Input in this field will only be necessary when the disposal of the interest is different from the disposal of the principal. This field may be changed at any time during the life of the contract but the change will only have an effect on future Interest Disbursements.
4. Call / Notice Borrowing (Emprunt Call ou Préavis) Category: 21001 Emprunts / Dépôts
XXXX(TAKEOVER) MONEY MARKET,DEPP SEE REF MM9733200007
***** MONEY MARKET DEPOSIT ***** ------------------------------------------------------------------------------ 4 Deal Date : 28 NOV 1997 1 Counterparty : 400101 2 Currency : BEF 3 Principal : 25,700,000 5 Value Date : 01 DEC 1997 6 Maturity Date : 30 9 Interest Basis : E 366/365 8 Interest Type : 1 FIXED 10 Interest Rate : 8.25 16 Liq Defer Int : L 15 Int. Due Date : 01 DEC 1998M0101 81. 1 Bk to Bk Inf: /REC/ECH.3.1.2000 ------------------- Settlement instructions ---------------------------------- 22 Payment Account: BEF149990100 REPRISE - MONEY MARKET BEF 24 Cpty Corresp. : 400101 23 Payment Account: 400101501201 28 Interest acct : 400101501201 39 Delivery Link : 1 DEFAULT