1a. T24 Limit - Parameter V1.0 [PDF]

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T24 LIMIT Parameters

Objectives



After completing this learning unit, you will be able to

 Set up parameters and related tables  Understand the Limit build sequence

Slide 2

Limit Menu

Slide 3

Dependencies – Static Tables Related

CURRENCY

ACCOUNT. CLASS

INDUSTRY

LIMITS

COUNTRY

ACCOUNT. PARAMETER CUSTOMER. STATUS

Slide 4

Parameter Tables

LIMITS

LIMIT.REFERENCE

LIMIT.PARAMETER

Slide 5

Limit Levels

Global

Products

Sub-Products

Sub-Products

Level 0

Sub-Products

Sub-Products

Level 1

Sub-Products

Sub-Products

Level 2

Slide 6

Set up Products



Multi level sub-products

 Possible to set up to 12 levels  Mandatory - Product  Optional - Global + Sub product levels 0 to 9



Important to draw inter-relationship and hierarchy by way of a tree diagram first



Limits can be defined only in bottom-up sequencing

 Lowest Multi Level Sub Product should be defined first.  At each Multi Level you define the Level and Reference Child, if any

Slide 7

LIMIT.REFERENCE



Admin menu/Limit/Create Limit Reference

Slide 8

LIMIT.REFERENCE - ID of Limit Products



Limit products are classified as Global, Product and Sub Products and identified in a particular way through the Ids

TYPE

LENGTH

EXAMPLE

GLOBAL

5–7

10000

PRODUCT

3–4

SUBPRODUCT

3–4

200000

3000000

100

4000

3000

111 137

4013 4034

3080 3091

Slide 9

LIMIT.REFERENCE – Types of Limit Products

FX TB DP IN NULL

Slide 10

LIMIT.REFERENCE – Types of Limit Products



FX

 Foreign exchange limit types, usually include Clean risk to stipulate maximum value of contracts that may mature on any single delivery date. (a.k.a. Delivery risk)



TB

 Time band Limits can be set for time periods to control exposure by period for LD, MM, SC etc. ‘Longer the duration, higher the risk’ concept. Automatically apportioned from longer term to short



DP

 Deposit type mainly used in LD and MM for information purpose



IN

 Information purpose.

Will not trigger any overrides unless CHECK.LIMIT flag is set to Yes in Limit record



Null

 Left blank for Account and Global limits All related Limit Products and Sub Products should have the same attribute in this field Slide 11

LIMIT.REFERENCE – Reducing Limit



REDUCING.LIMIT field

 Indicates whether the Limit regains its original value on liquidation or repayment of utilisation / draw down.

 Options are  Y – Reducing or Non – revolving in nature.

 N – Non reducing or Revolving in nature

 Account, Forex and Money market products can only be defined as Non reducing or Revolving in nature

 All products falling under a Global line and all sub products under a Global line will all have to have the same value in this field.



DEFAULT.CHECK

 Specifies whether the Limit Reference requires checking, and whether limit overrides are required, when Limit records are created by default  For Limits which record data for information only (such as deposits and Fiduciary Placements), this field should be set to 'NO' to prevent overrides being generated

Slide 12

LIMIT.REFERENCE – Limit Sub allocation

500 Loans

High risk

300 Overdrafts Medium risk

400 LCs

Low risk

Slide 13

LIMIT.REFERENCE – Limit Percentage



LIMIT.PERCENTAGE field

 Defines the percentage amount of each transaction movement that is to be monitored against the limit amount.  This is a flat percentage applied to all contracts under the limit type – If 10% is indicated, for a contract value of 100,000 limit of only 10,000 will be updated  To be defined only at the lowest level. – No input allowed for Global limit references and for Products / Sub products with a reference child  Always taken as 100% for overdrafts in accounts

 The percentage value could be changed through LIMIT.CHANGE

Slide 14

LIMIT.REFERENCE – Rate Mechanism



CONVERT.RATE field

 Specifies the rate mechanism to be used for revaluation of limit outstanding when the limit and the transaction are in different currencies  When Update.Rate field in LIMIT.PARAMETER is set to No, the mid rate will be uniformly used for revaluation  When set to Yes, Options given here will be applied for the respective Limit products. – BUY-BUY, BUY-MID, BUY-SEL, MID-BUY, MID-MID, MID-SEL, SEL-BUY, SEL-MID, SEL-SEL » Home currency USD. Contract currency GBP. Limit currency EUR.

» Under BUY-BUY, GBP will be converted into USD at Buy rate and USD to EUR at BUY rate. » Under SEL-BUY, GBP will be converted into USD at Sell rate and USD to EUR at Buy rate – However in a Limit structure the rate specified in the lowest limit reference used will be taken for updating the outstanding in the higher limits in the hierarchy

Slide 15

LIMIT.REFERENCE – Rate Mechanism Case - 1 Limit XXXXXX.400.01 is in LCY (Say USD). A contract forUSD100000 is put through to hit the limit. In this case since both limit and the transactions are in LCY there is no conversion involved and therefore the limit outstanding will be updated with -100000

Case - 2 A contract for GBP100000 is put through to hit the limit given in case1. Here the transaction in GBP will be converted to LCY which is also the limit currency, using the first component of the CONVERT. RATE specified in the limit reference 400 which in this case is the BUY rate of the transaction currency. If the Buy rate for GBP is 1.50 then the limit outstanding will be up dated by-150000(100000*1.50) and the total outstanding in the limit after this transaction will be 100000-150000= -250000.

Case - 3 Limit YYYYYY.400.01 is in EUR. A contract for GBP100000 is put through to hit this limit. BUY rate of GBP=1.50 Sell rate of EUR=1.20. In this case the transaction in GBP will be converted to USD by using the first component of the CONVERT. RATE which is BUY. This amount will be converted t o EUR which is the limit currency, using the second component of the CONVERT. RATE which is SEL. So the limit outstanding will be calculated using the formula 100000*1.50/1.20=125000(EUR) Slide 16

Workshop



Define the following Limit Structure

Global

Revolving Limit

Non Reducing, ID XXX0000

Product

Loans

Non Reducing, ID XX00

Sub product

Project loan

ID XX01

Study Loan

ID XX02

Slide 17

Workshop - Solution

Global XXX0000 30000

Guarantee

Loans XX00 1700

Project loan

Study Loan

XX01

XX02

1701

1702

Slide 18

LIMIT.PARAMETER



Admin menu\Limit\Update Limit Parameter

Slide 19

LIMIT.PARAMETER – Monitoring and Reporting PARAMETERISATION



Can produce reports before stipulated days of expiry and review dates

 1 to 99 days possible



Date and cycle for Country, Commodity and Currency reports

 Daily, Weekly, TWMTH and Monthly frequencies possible



Possible to report under suitable groupings of Commodities, Countries and Currency defined in fields

 COM.GROUP.GRP and COM.PROD.NO  LCs (Group) and Sight and Acceptance L/Cs (Products)

 COU.PRODUCT.GRP and COU.PROD.NO  CCY.PRODUCT.GRP and CCY.PROD.NO



Also possible to set limits for such groups in LIMIT.COUNTRY, LIMIT.COMMODITY and LIMIT.CURRENCY

Slide 20

LIMIT.PARAMETER – Revaluation Related



Limits in foreign currencies are revalued from time to time as set in REVALUTION.TIME field

 Date of first revaluation and further frequency



Whether the revaluation is at mid-rate or a combination of rates like BUY-BUY, BUY-SELL, SELL-BUY etc. Indicated through UPDATE.RATE field

 NO indicates that the limit should be revalue at mid rate  YES indicates that the rate mechanism choice to be take from CONVERT.RATE field specified in LIMIT.REFERENCE

Slide 21

LIMIT.PARAMETER – Default Limits

Slide 22

LIMIT.PARAMETER – Respective application to products PARAMETERISATION



The product number will be attached to the respective application. If the user desires more specific limit verifications, then he can attach the product number to specific application and category.

 Application  Product ID  Decision Field  Decision  Decision From  Decision To

Slide 23

Limit Build Sequence

LIMITS

LIMIT.REFERENCE

LIMIT.PARAMETER

Slide 24

Workshop - 2



Link the Limit references created in the previous workshop to Loan products of LOANS.AND. DEPOSITS application in LIMIT.PARAMETER.

Slide 25

LIMIT.CURRENCY PARAMETERISATION

 

Defines Limits by Currency. Maintained on-line, but the System does not attempt to provide realtime information about Currency Limit utilization.



Produced by system default, if not defined earlier and gets updated with subsequent inputs.



Report showing all of the Currency Limits and the use made of each is produced, at EOD process,



Frequency defined on the LIMIT.PARAMETER table.

Slide 26

LIMIT.COMMODITY.GRP PARAMETERISATION

 

Allows definitions for commodities /industry groupings



System will keep track of outstanding for the grouping, by means of overnight reporting.



It is possible to define any group of Industries as a Commodity Group.

When set up, file LIMIT.COMMODITY can be used to define Limits for Commodity Groups as well as for individual Commodities.

Slide 27

LIMIT.COMMODITY PARAMETERISATION

   

Defines Limits by Commodity (Industry) Type. File is maintained on-line but no real time information on utilisation.. Report showing all Commodity Limits and the corresponding utilisation is produced at a frequency as defined on the LIMIT.PARAMETER table, as an EOD process. If it is necessary to define Limits for a group of commodities, then the Commodity grouping is specified by the LIMIT.COMMODITY.GRP table.

Slide 28

LIMIT.COUNTRY PARAMETERISATION



Defines Limits by Country or Group of Countries.

 

No real-time information of Limit utilisation. Report on Country Limits and the utilisation

is produced at a frequency as defined on the LIMIT.PARAMETER table.



If it is necessary to define Limits for a Group of Countries, such as the EEC or South America, then the Country Grouping is specified

by

the

LIMIT.COUNTRY.GRP

table.

Slide 29

LIMIT.COUNTRY.GRP PARAMETERISATION

 

Allows the definition of Country Groupings.

  

Overnight reporting.

The file LIMIT.COUNTRY can then be used to define Limits for Country Groups as well as for individual Countries. No logical grouping restriction Possible to define South Africa, for instance, as part of Europe.

Slide 30

T24 Limit: Parameters – A review



In this learning unit, you learnt about Limit Parameter



You will now be able to:

 Explain the dependencies of Limit module with other application  Understand the limit build sequence

 Parameterization of LIMITs

Slide 31

Questions ?

Slide 32

Thank You