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Unit 3 Transaction Manager: Money Market (Special functions (Additional of…
Unit 3 Transaction Manager: Money Market
Introduction to Money Market
Product type
Interest rate instruments
are used to
map money market transactions
, which include different forms of
interest payments and repayments
.
Cash flow transactions
You enter the term manually and also the cash flow that results from the particular structure of the transaction.
This includes position changes, expenses, revenues, and payments.
Facilities
enable you to map master
credit lines
between a lender and one or more fixed business partners for a series of withdrawals against credit.
Fixed-term deposits
Due date arranged from the outset
Fixed interest for the whole term (at least 30 days)
Rollover facility
Deposits at notice
Concluded for an unspecified period
Due date depends on the period of notice
Commercial paper
short-term, discounted bearer bond
No interest payments during the term
Issuer and investor enter into a business relationship directly and agree on a repayment amount, which the debtor pays to the creditor at the end of the term.
This repayment amount is discounted to the start of the term using the required yield. The investor pays the amount calculated to the debtor at the start of the term.
Definition/characteristics
Money market transactions
are for
short- to medium-term
investments or borrowing capital
You can make Cash and Liquidity Management decisions in the money market area based on the surpluses or deficits calculated in Cash Management.
Trading functions
Fixed-term deposit
Transaction and Position Management Process
Trading
Create oder/contract
Rollovers
Reversals
Transaction history
Back office
Settlement/control
Netting
Confirmation letters
Reversals
Transaction history
Interest rate adjustment
Accounting
Postings
Payment transactions
Accrual/Deferral
Valuation
Reversals
Financial transactions
Entering a Fixed-Term Deposit
Financial trransactions
are assigned to the related organizational unit (company code) within your company
are concluded with a business partner
are concluded for a specific product/transaction type
can be created with different processing methods
Trading Support
Partner
Standing Instructions
Market data
Creating a Financial Transaction
Creating a Fixed-Term Deposit: Structure
Investment
Term
Interest structure
Payment Details
Financial Transaction Conditions
Condition types include different interest, dividend or repayment terms, which ensure that each product type is assigned its appropriate structure characteristics.
Depending on its type, a condition position is characterized by amounts or percentages and calculation bases, as well as calendar data and date updates.
The
principle task
of conditions is the
automated generation of flows
.
the flow types that you assign to condition types should show changes in the payment flows and should be elements of the cash flow.
the cash flow provides the basis for
Postings
Effective interest rate calculations
Accrual/deferral of expenses and revenues
Collective Processing
Overview of money market transactions which correspond to the relevant selection criteria
Offers for Fixed-Term Deposits and Foreign Exchange
Using the Offer activity category, you can group and store quotations from different bans with a reference.
You can create a contract directly from an offer entry.
You have to create a
separate number range
for transactions in the Offer activity category.
The number range for the relevant transaction type is allocated in the Number range for offers field in Customizing for transaction types.
Simulation of Fixed-Term Deposits and Foreign Exchange
Creating simulated financial transactions
A business partner is not required for simulation
Management with a
separate number range
Creating a contract from a simulation
Deposit at notice
For deposits at notice, there are functions for giving notice or rolling over deposited funds
Rolling over means an
increase or decrease in the amount of original deposit at notice with
, where applicable, different conditions under the same transaction number.
With deposits at notice, the cash flow can only be generated for a set period, since the end of term is only fixed when notice is given.
Commercial Paper/master agreement
Term of contract
Permitted company codes
Permitted business partners
Permitted transaction types
Minimum and maximum transaction terms
Currencies
Tranche
Minimum amount
Total volume
Interest rate instrument
The interest rate instrument supports the entry and calculations of forms of fixed and variable interest as well as installment-based and full payment on maturity repayment schedules.
To enable the different interest and repayment calculation procedures, you must describe the financial mathematical structure of the interest rate instrument.
Transaction amount, currency, and flow type
Term
Interest rate structure
Repayment structure
Cash flow transaction
Flexible representation of a wide range of transactions
Manual entry of
Term
Cash flow from position changes, expenses, revenues, payments etc.
The following are supported
Entering and processing cash flow transactions
Subsequent management in back office and accounting
Facility
Definition
Facilities enable you to map master credit lines between a lender and a fixed business partner for a series of withdrawals against credit (drawings)
Objective
Facilities management and processing
Confirmed facility
Unconfirmed facility
Back-office functions
Business process
Settlement = Checking
You can check, change, or add information that is relevant for posting and payment.
Position indicator
This indicator specifies the position management and valuation parameters at company code level. and allocates the account assignment reference to a position.
The position indicator can be created manually or automatically by the system.
Transaction history
The transaction history allows you to trace each activity and its relevant details.
Correspondence
Correspondence serves to document and match concluded financial transactions.
Confirmation Management
Difference between
outgoing confirmation
and
counterconfirmation
Viewing confirmation status for transaction correspondence under
Status
Status management for counterconfrimation can be controlled according to the business partner - in the
Standing Instructions + Customizing
Monitoring overdue
counterconfirmations
Optical archiving
of correspondence
Correspondence overview and
correspondence monitor
Netting
Reference
To document the connections between Treasury transactions or objects, you can define links in the administrative data of a transaction.
A reference between transactions documents a relationship between "n" transactions.
There are also references which are created by the user (netting).
Interest Rate Adjustment
For financial transactions with variable interest, you carry out an interest rate adjustment periodically. You fix the interest rate to the current value of a reference interest rate.
Accounting functions
Business process
Posting logic
Note: Cash and Liquidity Management integration
Posting overview/posting journal
Special functions
Additional of capital
Effective interest rate
Archiving
Rollover
Reversal
Accrual/deferal
Workflow
Mirror transactions
BAPIs