Entering deals is a key feature of Treasury. There are 16 different types of deals (for example, bonds, forward rate agreements, options) and 3 other deal-related items (deal orders, exposures, and external exposures) that you can enter in Treasury. Each deal type is a generic version of a financial instrument that is commonly used by treasurers (for example, bonds, stocks, foreign exchange contracts, or negotiable securities). You can use each deal type as is, or combine several deals or deal types to create a more complex deal.
Each deal type has the following attributes associated with it:
Deal Subtype: The deal subtype determines the cash flow direction and, as a result, the accounting for each deal. For example, Forward Rate Agreement deals have a deal subtype of either Fund or Invest, whereas Foreign Exchange Option deals have a deal subtype of either Purchase or Sell. For a list of available deal subtypes supplied by Treasury, see: Deal Subtypes by Deal Type.
Product Type: The product type is a user-defined attribute that you can use to distinguish between similar deals with different accounting methods. You must define at least one product type for each deal type that you intend to use, except for current account balance transactions and intercompany transfer transactions.
Deal Status: Each deal has a set of deal statuses that can be assigned to it over the entire life of the deal. For example, current, cancelled, expired, or closed. The deal status can change automatically based on an action taken (for example, exercising an option or reselling a discounted security) or it can be manually changed (for example, changing an option status to Expired). For a list of available deal statuses supplied by Treasury, see: Deal Statuses by Deal Type.
Date Type: Each deal has a set of date types that are used for settlement, accounting, and reporting purposes. For example, a bond has several dates associated with it: start date, maturity date, and coupon date. For a list of date types by deal type, see: Date Types by Deal Type.
Amount Type: Each deal has a set of amount types, such as a deal's principal amount, interest amount, and adjusted interest amount. For a list of available amount types supplied by Treasury, see: Amount Types and Actions by Deal Type. You can create additional amount types for retail term money deals only.
Action: Some amount types have a set of actions that determine the cash flow accounting for the amount. For example, interest amounts can be paid or received, or an accrual can be an original posting or a reversal. For a list of available amount types supplied by Treasury, see: Amount Types and Actions by Deal Type.
Pricing Model: The pricing model is used to calculate the fair value of the deal during a mark to market revaluation. A set of default pricing models is supplied by Treasury. You can create custom pricing models for each deal type. For a list of pricing models supplied by Treasury, see: Pricing Models by Deal Type.
To set up and use deals effectively in Treasury, you must:
Define at least one product type for each deal type that you trade, except for current account balance transactions and intercompany transfer transactions.
Un-authorize deal types, deal subtypes, or product types that you do not want users in your company to perform. For example, you can prohibit all Treasury users from selling foreign exchange options by unauthorizing the Sell deal subtype for the foreign exchange deal type.
Note: When you un-authorize a deal type, deal subtype or product type, you un-authorize it for all users and for all companies that are defined in Treasury. If you un-authorize a deal, deal subtype or product type in the Deal Types/Product Types window, it will override any user authorizations that you previously enabled in the User Access Levels window.
You can also perform these optional steps:
Edit the code or name of deal types, deal subtypes, product types, dates, statuses, amount types, and actions, as your business practices require.
Add new pricing models for deal types to distinguish user-entered values from calculated values. You can only define new pricing models for deal types that have a "Fair Value" pricing model pre-seeded in Treasury. For a list of pricing models supplied by Treasury, see: Pricing Models by Deal Type.
Add new amount types for retail term money deals. For example, if you are charged a fee on a loan, or if you receive a rebate on a loan, you can create new amount types to accommodate these amounts.
After you set up your deal types, you can enter into each of the 16 different deals available in Treasury. For more information on a specific deal type, see: Foreign Exchange Deals and Money Market Deals.
A product type is a user-defined short code for classifying the different financial products that exist within a particular deal type. Use product types to distinguish between market instruments that are similar, but require different accounting treatment.
When you add a product type, every user who is authorized to use the associated deal type is automatically authorized to use that product type. To un-authorize a product type for all users in your company, uncheck the Authorization check box for the product type in the Deal Types/Product Types window. To un-authorize the product type for selected users, you must modify the user access levels for each user in the User Access Levels window and change the journal structure by updating the Journal Entry Actions window.
You cannot create product types for current account balance transactions or intercompany transfer transactions.
In the Deal Types/Product Types window, select a deal type.
In a blank row of the Product Types region, enter a unique code for the product type in the Type field. This code is used to identify the product type in the deal input form.
Note: Product types must be unique within a deal type. For the sake of clarity, consider making your product types unique across all deal types.
Enter a description for the product type.
If the deal type is Negotiable Securities (NI), in the Discount/Yield Basis field, choose whether the deal is quoted by using a discount rate or a yield rate.
In the Default Pricing Model field, choose the default pricing model that you want to use to revalue the deal. For a list of pricing models available for each deal type, see: Pricing Models by Deal Types.
Enable the Authorized check box to authorize the product type. When you authorize a product type, you authorize it for use by all eligible users in your company.
Save your work.
Use the Deal Types/Product Types window to authorize or un-authorize a deal type, deal subtype or product type for all users in your company. By default, all deal types, deal subtypes, and product types are authorized.
When you authorize a deal type or a deal subtype, you do not automatically authorize the associated deal subtypes or product types for that deal. You must authorize each product type separately.
You cannot change the deal tolerance levels for your deal subtypes from the Deal Types/Product Types window. If you want to change the deal tolerance level for a deal subtype, use the Deal Rate Tolerances window.
In the Deal Types/Product Types window, select the deal type, the deal subtype, or product type that you want to change.
Enable or disable the Authorization check box for the selected item.
Save your work.
You can only add new amount types for retail term money deals. Use amount types to categorize the different amounts that are not already defined, but that may be associated with your retail term money deals, such as fees and registration costs.
You can define how each amount type is entered in the journal by defining a journal structure in the Journal Entry Actions window. See: Journal Entry Actions.
In the Deal Types/Product Types window, select the Retail Term Money deal type.
Choose the Amount Types tab region.
In a blank row, enter a code for the amount type code and a description.
If you want to Select an action code for the amount type.
Save your work.
Use the AOL Lookups window to add new pricing models to the ones provided by Treasury. You can add new pricing models for deal types that have a Fair Value pricing model. You can enter as many new pricing models as you want. For a list of the pricing models for each deal type, see: Deal Pricing Models by Deal Type.
After you create the new pricing models that you want, use the Deal Types/Product Types window to assign pricing models to deal types.
Navigate to the AOL Lookups window.
In the Type field, query the lookup type XTR_DEAL_PRICE_MODELS.
In a blank Code field, enter a unique code for the pricing model.
Enter a Meaning and Description for the pricing model.
Check the Enabled box to activate the pricing model.
Save your work.
Navigate to the Deal Types/Product Types window.
In the Deal Types region, choose the deal type that you want.
Choose the Pricing Models tab region.
Use the Authorized box to authorize/un-authorize pricing models.
Save your work.