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R12/XTR: Whole Sale Term Money (TMM) Transactions Question / Answer (Doc ID 1272903.1)

Last updated on MARCH 25, 2019

Applies to:

Oracle Treasury - Version 11.5.10.2 to 12.2 [Release 11.5 to 12.2]
Information in this document applies to any platform.

Purpose

This document endeavors to assist Oracle Treasury users with answers to many of their questions about the Whole Sale Term Money (TMM) Transactions in Oracle Treasury and how they work.

Concepts

Wholesale term money deals are used to borrow large amounts from banks and institutions, rather than from small investors. Examples of wholesale term money deals include promissory notes and private debt placements. These types of deals can be fixed or floating rate and are generally not exchanged. You can automatically reset the floating rates in your wholesale term money deals by setting a benchmark rate and a margin and then running the Reset Floating (Benchmarked) Rates program. A bit of explanation about how the TMM deal type works should be provided. TMM deal type is geared towards the term loans and similar instruments. Their instruments have the following characteristics:

  • initial loan amount is received on the start date
  • interest on the loan amount is paid with a predetermined frequency
  • (optionally) loan amount is increased or decreased during the life of theloan
  • loan amount in full is paid back on the maturity date together with the last interest payment

Now, in TMM deals, each interest period is represented by a transaction with a start date, rate, maturity date and interest amount. On each transaction row, the columns have the following meaning (assuming no interest tax):

Gross Interest - the interest amount that is initially always equal to the System Interest but can be overridden by the user if the setup allows it. It represents the interest amount from transaction's start date to maturity date based on the principal balance outstanding.

Adjusting Principal for Wholesale Term Money Deals: You can adjust the principal on one or more transactions in a wholesale term money deal at any time during the period of the deal. For example, you can add a payment in the middle of a payment period. You can enter either a single adjustment or create a schedule of multiple adjustments. For multiple adjustments, you can review and recalculate your adjustment schedule before saving.

Adjusting Interest for Wholesale Term Money Deals: You can adjust the interest on a wholesale term money deal at any time during the period of the deal. To adjust the interest rate for a wholesale term money deal:

1. In the Wholesale Term Money window, query the deal you want to adjust.
2. Choose the Interest Adjustment button. The Interest Rate Adjustments window appears.
3. Enter a new interest rate.
4. Select a period in which you want the interest rate to take effect.
5. If you want the interest rate to expire on a certain date, enter the date in the Applies Until field. If you do not enter a date in this field, the rate applies to every period after the effective date.
6. Save your work.

Settling Interest for Wholesale Term Money Deals: Use the Transaction Details window to settle interest for specific transactions in a wholesale term money deal. You can also specify the date on which you want to settle your payments.

Transaction details: > Maintain Transactions:
This has Transactions of the deal as per:

  • Monthly Transactions from Start Date of the Deal to Maturity Date of the deal.
  • If Force Month End is enforced than the subsequent transactions will be from Start of the month to end of the month.

This shows all the details including Principal: Increase (RECIPT) to Decrease (PAYMENT) and ACCUM INTEREST etc.

System Interest - system calculated interest from transaction's start date to maturity date based on the principal balance outstanding.

Interest Settled - this field only has a value if the Settle Interest check box is checked. The value is equal to the Gross Interest from this transaction plus any interest that has not been settled from the previous transactions (see Accum Interest)

Accum Interest - this field only has a value if the Settle Interest check box is not checked. It represents the amount of interest that will be carried forward from this transaction to the first subsequent transaction that has the Settle Interest check box.
When you check the Settle Interest check box, you are settling the interest that corresponds to the entire outstanding balance on this transaction - not to the amount of principal decrease or increase that is recorded on the same transaction.This is a crucial piece of information here.

If the client wants to create and account for the interest amount that is based on the principal decrease, then another deal type -

Fixed Income Securities - seems to be a more appropriate vehicle for their instrument, rather than TMM.
They will have to start bY creating a Bond Issue. Then, they will have to create a Fixed Income Securities deal with subtype ISSUE (issue this Bond).
Then, create Bond Repurchases as a means of reducing the outstanding principal balance.

Questions and Answers

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In this Document
Purpose
 Concepts
Questions and Answers
 Q1: How to generate Capitalize Interest in a Whole Sale Term Money transaction?
 Q2: How to calculate the "effective rate" in the BROKERAJE/TAX tab for Whole Sale Term Money?
 Q3: How to allocate annual liability amounts automatically?
 Q4: TMM if you do Multiple Principal Adjustment on same day this not Displayed/Adjusted correctly?
 Q5: Explain why CANCELLED status for DEAL not available in LOV?
 Q6: FORM:XTRINWHL.FMB - Wholesale Term Money, Need ability to automatically set the Interest Due On date to X number of days before/after the Maturity Date (similar to what is available for bonds).
 Q7: Early Maturity of Wholesale Term Money?
 Q8: Unable to enter Grace Period in Wholesale Term Money Transaction?
 Q9: Interest Capitalization: by making the Principal adjustment (increase) for the interest to be capitalized and in that period manually update the Interest value to zero. Can you validate this action?
 Q10: Early Maturity of Wholesale Term Money: not sure how to cancel TMM deal before the maturity after some accruals are generated
 Q11: Unable to Setup Journal Entry Actions for Unrealized Currency Gain/Loss (CCYUNRL) for TMM Deal Type?
 Q12: Interest Calculation for a Wholesale Term Money Deal with Day Count Basis 30/360?
 Q13:Wholesale Term Money Transaction with Maturity Date Beyond 2050 Has Error: The Ending Date Must Be Later Than or the Same As the Beginning Date
 Q14: Can you DELETE a deal?
 Q15: Is it possible to extend a TMM FUND Transaction ONCE IT IS SAVED?
 Q16: Wholesales Term money transactions unable to update interest rate.  Error message: This action is not permitted, because one or more Accrual Batches exist for this deal
 Q17: Do Oracle Treasury support  TMM AMORTIZE USING FRENCH AND GERMAN SYSTEMS OF CALCULATION?
 Q18: Wholesale term money, while selecting value for deal type, receive the following error: "list of values contains no entries"
References


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