A brokerage rate is the rate that is paid to the broker for brokered deals. Use the Brokerage Schedule and Details window to organize your rates into rate schedules, create brokerage categories for different deal types, and define how you want to perform settlements for your brokerage fees.
You can only define brokerage rates for bills, bonds, foreign exchange, retail term money, short term money, and wholesale term money deals.
Brokerage fees are settled separately from the deals to which they are linked. Brokerage fees do not alter the ultimate settlement amount for the deals.
Use brokerage rates and rate groups to define the set of rates that a brokerage firm charges for its services. Each rate group can contain one or more brokerage rates. Each brokerage rate can apply to range of values. For example, you can define one rate for deals under $1,000,000.00, and another rate for deals over $1,000,000.00.
To ensure that your brokerage rates are calculated correctly, leave as small a gap as possible between each rate in the rate group. For example, if the maximum value for one rate is $1,000,000.00, the minimum value for the next rate should be $1,000,000.01.
Define the counterparty as a Risk Party in the Counterparty Profiles window. See: Counterparty Profiles.
Navigate to the Brokerage Schedule and Details window.
If you want to define a new brokerage rate group in the Rate Group field, enter a unique name for a rate group. If you want to add a brokerage rate to an existing rate group, select a rate group from the list of values.
In the Effective From field, select a date from which you want the brokerage rate group to become effective.
In the Brokerage Rates section, for each rate that you want to define, enter a minimum and a maximum amount that you want the brokerage rate to apply to.
Note: Leave as small a gap as possible between each rate in the rate group. For example, if the maximum value for one rate is $1,000,000.00, the minimum value for the next rate should be $1,000,000.01.
In the Brokerage Rate field, enter the brokerage rate as a percentage.
Save your work.
Use brokerage schedules to define the relationship between a brokerage rate group and a payee, deal type, and calculation type. Brokerage schedules are used to calculate the appropriate brokerage fees for a particular deal type and payee. You can create multiple schedules for each deal type or payee.
Define a brokerage rate and rate group. See: Defining Brokerage Rates and Rate Groups.
In the Schedule field of the Schedule tab region, enter a unique code for the brokerage schedule.
In the Rate Group field, select a rate group.
In the Payee field, select the counterparty that is going to receive the brokerage fee.
In the Deal Type field, select the deal type that you want to calculate the brokerage fee for.
In the Calculation Type field, select the calculation type that you want to use to calculate the brokerage fee.
Note: The list of available calculation types differs depending on which deal type you selected. For example, for equity deals, you can only select Consideration - Flat Basis.
To authorize this schedule for use, check the Authorized check box.
Save your work.
Use brokerage categories to define the default brokerage schedule for a particular combination of deal type, deal subtype, product type, and counterparty. Brokerage categories can be generic (for a particular deal type) or more specific. For example, you might want to create one schedule for all short term money funding deals with ABC bank, and another schedule for all wholesale term money funding deals with XYZ bank. You can choose to override a default brokerage category when you enter a deal.
Define a brokerage schedule. See: Defining Brokerage Schedules.
In the Category and Description fields of the Category tab region, enter a unique brokerage category code and description.
For each brokerage category that you define, in the Brokerage Details region do the following:
In the Deal Type field, choose the deal type that you want to define a default brokerage schedule for.
In the Schedule field, choose the default brokerage schedule for the deal type.
If you want the brokerage schedule to apply to a particular combination of deal subtype, product type, or counterparty, complete those fields as necessary.
Save your work.
To allocate a brokerage category to one or more counterparties, do the following:
Choose the Allocate to Cparties button. The Counterparty Profiles window appears.
Query the counterparty that you want to assign the brokerage category to.
Choose the Tax/Brokerage Detail button. The Tax/Brokerage Details window appears.
In the Categories Brokerage field, choose the brokerage category. You can override this default brokerage category during deal input.
Save your work.
Use the Settlement Codes tab region of the Brokerage Schedules and Details window to define which GL account you want to use to settle brokerage fees for a company.
In the Company field of the Settlement Codes tab region, choose the company whose brokerage settlements you want to define.
In the Settlement Code and Description field, enter a unique code and description for the brokerage settlement.
In the GL Account field, select the GL Account that you want to apply the settlement to.
Save your work.