Use deal rate tolerances to specify the percent by which you will allow deal rates to fall above or below the current system rate for a specific deal type. For example, you may set the tolerance for foreign exchange spot deals to 1%. That means that when you enter a foreign exchange deal, you deal rate can only be 1% above or 1% below the current foreign exchange spot rates for the currencies in the foreign exchange deal.
Setting a deal rate tolerance level does not prevent you from entering into a deal that falls outside of the specified tolerance level. If a deal falls outside of the specified tolerance you will receive a warning, but you can continue to enter and save the deal.
You set up tolerances for deal type, deal subtype combinations on the Deal Rate Tolerances window.
Deal rate tolerance is calculated differently for different deal types.
The deal rate tolerance for foreign exchange transactions is calculated by multiplying the latest system mid rates by the specified deal rate tolerance level. (The mid rate is the sum of the bid rate and the offer rate divided by two). Then, that value is added to or subtracted from the latest system mid rate to determine the range of tolerance.
The deal rate tolerance for money market transactions is calculated by determining the latest system mid rates for the period that is the closest to but that does not go over the term of the deal. The tolerance level is added or subtracted from those rates to determine the range of tolerance.
The deal rate tolerance for equity transactions is calculated by determining the difference between the stock price and the market price table. The tolerance level is added or subtracted from those rates to determine the range of tolerance.
When you set tolerance levels, consider the following:
How often do you plan to update your current system rates?
How volatile are the markets?
What margins do you pay?
If the deal rate tolerance level is too narrow, you will encounter many warnings when you enter a deal. If the deal rate tolerance level is too broad, the tolerance level may not be effective. When you set tolerance properly, the deal rate tolerance warnings will highlight possible data entry errors.
In the Deal Rate Tolerances window, select the row that contains the deal type, deal subtype combination for which you want to set a deal rate tolerance range.
In the Tol% field, enter the percentage by which you are willing to fall above or below the current system rate for the deal type, deal subtype combination. By default, all deal rate tolerance levels are set to 1%.
Save your work.