Rate Fixing

Hi

Please tell us what is RATE FIXING in Funds Transfer.

Regards
R Balaguru

From Temenos documentation:

Rate Fixing

When an exchange rate for a currency is not fixed in the CURRENCY application ( FIXING.DATE is less than FT’s PROCESSING.DATE ) and the FT contract is processed requiring that Currency as Debit account currency or Credit Account Currency and the other side (Dr/Cr) Account currency is Local currency then system raises override “RATE NOT FIXED – USE EXISTING RATES”. The response to this override can be as “YES” to use the available exchange rates or “NO” to wait till the exchange rates for the day is available.



When response to the override is “No” then system creates FT with ANORATE status and waits for the exchange rate to be fixed for the day or when response is “YES” using existing rates creates accounting, position and delivery messages. In case fixing is already done ( FIXING.DATE is equal to FT PROCESSING.DATE ) FT will be created using the available rates since rates are available (Existing functionality).



To process FT’s based on fixing date; RATE.FIXING flag in FT.APPL.DEFAULT can be set to “YES”.



RATE.FIXING flag defaulted from FT.APPL.DEFAULT to FUNDS.TRANSFER and can be changed from “YES” to “No” but not vice versa.



Based on RATE.FIXING flag, FT is processed as per following:



Case 1:



Rates for the day are not available ( FIXING.DATE in Currency application is less than processing date) and FT can be processed only after getting that day rates.



Give RATE.FIXING as “YES” in FUNDS.TRANSFER application then FT will be created with ANORATE status. However customer account balance is checked and position entries updated with Dealer Desk as given in FT.APPL.DEFAULT .



Once the rate is fixed for the day and by running FT.RATES online, accounting entries, position and delivery messages are generated using current exchange rate and dealer desk as given in FT. Position entry created with FT.APPL.DEFAULT dealer desk gets reversed.



Case 2:



When exchange rates already fixed for the day ( FIXING.DATE in Currency application is equal to FT processing date) and subsequent FT needs to be processed based on next working day rates



Give RATE.FIXING as “YES” and FT will be created with processing date as next working date and with status as IFWD. No accounting entries, however position and delivery messages get generated.



Next day once the rate fixed for the day by running FT.RATES online-accounting entries, position and delivery messages gets generated using latest exchange rate. (Like Case 1)



In all other cases FT will be created as per existing functionality.



FT records created through OFS will be using existing exchange rates even when the rate is not fixed for the day.



To create FT’s with ANORATE Status whenthe rates not fixed for the day, incoming OFS message needs to be supplied with RATE.FIXING as “ YES ” and AUTO.EXCH.RATE.IN as “ AWAIT ”.



Figure 12 - FT with RATE.FIXING as “YES” & STATUS as ANORATE


MT103 Type

From Funds Transfer, other than MT103, following 103 sub-types can be created using MT103.TYPE in FT.



MT103+ - with Bank field tags (52,54,55,56,57) as “xxA” along with BEN.ACCT.NO for straight through processing.



MT103 EXTEND- with Tag 77T (Envelope contents).



In case MT103.TYPE is MT103Extendthen EXTEND.INFO in FT is mandatory and details entered in EXTEND.INFO along with the EXTEND.FORMAT is mapped to tag 77T of MT103. In MT103 outgoing swift message user header block 3 for field 119 validation flag will be having “REMIT”.



In case MT103+ is given then all bank fields ACCT.WITH.BANK , RECEIVER.BANK , REC.CORR.BANK , INTERMED.BANK should have either a customer who has a record in DE.ADDRESS for carrier as “SWIFT” or a valid BIC code prefixed with “SW-“ along with BEN.ACCT.NO.



In FT.APPL.DEFAULT field MT103.CONTROL , is set to SYSTEM, then system raises an ERROR message if above condition is not met. If above condition is met an override is raised and MT103 is generated instead of MT103+.



The generated MT103+ will be having “STP” in user header block 3 for field 119 validation flag.



In other cases plain MT103 is generated.