Discounted securities are securities that trade for less than their face value or than their value at maturity. Each discounted security has one interest amount, which is included in the face value of the security. Interest on discounted securities can be calculated on a straight discount or on a yield basis.
Use the Discounted Securities window to issue, buy, or short sell discounted securities.
If you issue securities, set up the bill/bond issue numbers. See: Bill/Bond Issue Numbers.
Navigate to the Discounted Securities window.
In the Company and Counterparty fields, choose a company and counterparty, respectively, for the deal.
If you are conducting the deal for a client, in the Client field choose the client.
In the Portfolio field, choose a portfolio for the deal.
If you are performing a trade and only expect one cash flow from the security at a set date in the future, check the Trade Bill check box. The transaction rate is automatically set to zero. You cannot override this rate.
Note: Selecting this check box affects the list of available deal subtypes.
In the [ ] Descriptive Flexfield, complete the descriptive flexfield information as required. For information on descriptive flexfields, see: Defining Descriptive Flexfields.
In the Deal Subtype field of the Main Details tab region, choose a deal subtype for the deal. Select the Sell deal subtype only if you want to short sell a security. If you want to sell a security you already own, see: Reselling Discounted Securities.
Note: If you checked the Trade Bill check box and you expect a positive cash flow, you must select the Buy deal subtype, which indicates that you will receive cash in the future (for example for delivering goods). If you checked the Trade Bill check box and you expect a negative cash flow, then you must select the Issue deal subtype, which indicates that you must make a payment in the future.
In the Product field, choose a product type for the deal. The default discount basis for the select product type automatically appears in the Discount/Yield Basis field. For more information on setting the default discount basis see: Deal Types and Product Types.
In the Currency field, choose a currency for the deal.
In the Day Count Basis field, choose a day count basis for the deal. The day count basis is the number of days per year used to calculate interest on the deal. The possible day count bases are: actual/actual, actual/360, actual/365, actual/actual-bond, actual/365L, 30/360, 30E/360, 30E+/360. For more information on how each day count basis is calculated, see: Treasury Terms.
In the Start Date field, enter a start date and in the Maturity Date field, enter a maturity date for the deal.
Choose the Interest Details tab region.
In the Discount/Yield Basis field, select Discount or Yield to indicate whether the deal is quoted on a discount rate or yield rate.
In the Trans. Rate field, enter the rate for the deal.
Choose the rounding rule that you want to use for calculating interest on the deal in the Interest Rounding field. The possible choices are: Nearest, Round Up, or Round Down.
Choose the days that you want to include when the interest is calculated on the deal. The possible choices are: First Day, Last Day, or Both Days.
Note: If you select Both Days for Interest Includes, you cannot use the 30/360, 30E/360, or 30+/360 day count basis.
Complete the fields in the Additional Details tab region as needed.
If you use mandatory limit checking, select a limit for the deal in the Risk Party Details tab region.
Note: The limit you select must apply to either the Acceptor, Drawer, or Endorser of the deal. You must complete at least one of those fields in the Additional Details region to activate the list of values for the limit field.
Choose the Brokerage/Tax tab region and complete the necessary fields.
To enter the parcel details for the deal, choose the Parcel Details button. The Parcel Details window appears.
In the Parcel Details window, enter the details of the various securities you bought, sold, or issued as part of the discounted security deal. Enter the details for one type of security in each row. If you buy or sell multiple securities of the same type, enter the details for the security once, then indicate the number of securities you bought or sold using the Size field. If you issue multiple securities of the same type, enter the details for each security you issue in a separate row.
To enter the parcel details, do the following:
In the Size field, enter the number of securities you bought, sold or issued. If you issue securities, you can only enter a size of 1.
If the security is discounted on a yield basis, enter either the face value or the consideration value of the security. The other value is automatically calculated. If the security is discounted on a straight discount basis, enter only the face value of the security.
In the Interest field, the total amount of interest for the discounted securities deal appears. You can override this calculated interest amount by entering a new interest amount. The System Interest field shows the original interest amount calculated by the system.
Note: You can only override interest amounts if you have the appropriate user access levels. See: User Access Levels.
If you are issuing a security, select the serial number of the security you are issuing from the list of values in the Serial Number field. The issuing bank automatically appears in the Issue Bank field.
Select Done. You return to the Discounted Securities window.
Save your work.
If you need to enter discounted securities frequently and the details are available in an electronic source such as a bank file or a third party application, you can use the XTR_DEALS_INTERFACE table, XTR_TRANSACTIONS_INTERFACE table, and the Deal Interface Summary window to import Buy and Issue deal subtypes into Treasury. For more information, see: Importing Deals into Treasury.
Use the Discounted Securities Resale window to sell your discounted securities.
In the Find Discounted Security Resales window, query the security you want to resell. The Discounted Securities Resale window appears, listing all securities that match your query.
Select the security to resell and choose the Parcel Details button. The Parcel Split Details window appears.
In the Sell field, enter the number of securities that you want to sell. If the number you enter is greater than the number of securities listed in the Remaining field, you will short sell the difference of the securities.
Choose the Done button. You return to the Discounted Securities Resale window.
Choose the Create Resale Deal button. The Discounted Securities window appears with the part of the resale deal details already completed.
Complete the details for the discounted security resale deal as needed.
Save your work.
Use the Bill/Bond Issue Numbers window to view a list of your bill bond issue numbers.
Set up bill/bond issue numbers. See: Bill/Bond Issue Numbers.
In the Discounted Securities window, choose the Bill Issues button. The Bill/Bond Issue Numbers window appears.
If you want to add a range of bill/bond issue numbers, choose the Enter Serial Number Range button. The Bill Bond Issue Numbers window appears. For more information on adding bill/bond issue numbers, see: Bill/Bond Issue Numbers.
Use the Short Sales window to view a summary of the discounted security deals you short sold.
In the Discounted Securities window, choose the Short Sales button. The Short Sales window appears.
Use the View Discounted Securities window to view the details of a discounted security deal.
In the View Discounted Securities window, query the discounted security deal that you want to view.
If you want to view the list of securities that make up the selected discounted security deal, choose the Parcel Details button. The Parcel Split Details window appears.
If you want to view a summary of all of your short sale discounted security deals, choose the Short Sales button. The Short Sales window appears.