Setting up a TRADE
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Each new contract must be assigned a number. The system can generate a number - different ranges exist for purchases and sales, 3rd party, Internals and Brokerage - or the user can enter a unique number. Contract numbers are in the format 'nnnnnn' where 'n' is a number. Each contract or part contract has a suffix for identification. The head of the contract has the suffix '000'. Each time a new split for the contract is created it will be assigned the next sequential suffix up to a maximum of 17,000+ i.e. suffix=ZZZ.. Once this limit is reached a new contract must be set up. The initial information to be entered for the contract is the number, whether it is a purchase or sale, contract date, department and trader initials, the rest of the details are entered via the appropriate 'tab' and toolbar icons.
As the life of the contract progresses more information will be added. Different information about the contract can be added by selecting the appropriate 'tab' or by using the buttons and mouse. All updates are audited to show who performed the update and when it was performed. Eventually all parts of the contract will be allocated and invoiced or written off. Once the contract is complete it may be closed and archived. The contract remains available for viewing on the system even when archived.
Most of the information is code based. Client codes (Buyer, Seller, Shipping Line, Delivery Client, Warehouse, Agents) are maintained in ITAS menu option CLI. Other codes (Commodity, Contract Terms, Ports, Payment Terms, Weight codes) are maintained in ITAS option PHYSCODES. On codes prompts the possible entries can be viewed by using ^F or by clicking on the arrow by the side of the prompt.
The TRADE mandatories are
Contract type (P/S)
Commodity code
Weight Code
Currency Code
Contract Date
Buyer: Always except for third-party sales
Seller: Always except for third-party purchases
Price Code
Shipment Period
F&O Market: Always if price-fixing method
Prompt Month: Always if price-fixing method
Prem/Disc Currency: Always if price-fixing method
Differential Price Code: Always if price-fixing method
The following fields are mandatory dependent upon S01 View/Physicals//TRADE configuration:
Crop Year: ctrl30_formalcropyear and ctrl30_mandcropyear
Commodity Country: ctrl30_formalcropyear = “X” or ctrl30_mandcmyctry = “Y”
Delivery Client: ctrl30_mandexpeddelclient = “Y”
ROE: Yes if ctrl30_strictfx <> ‘’
Preallocation: for purchases if ctr30_mandpreallocp = “Y”
Reporting Group: ctrl30_mandcmyreport = “Y”
Packing Code: ctrl30_mandpackcode = “Y”
Contract Terms Port: ctrl30_mandcontermsport = “Y”
Shipment Weights: ctrl30_mandshipweights = “Y”
Port of Origin: for purchase if ctrl30_mandportorig = “Y”
Market Sector: ctrl30_mandmktsector = “Y”
Container Type: ctrl30_mandcontaintype = “Y”
Destination: for sale and ctrl30_manddest = “Y”
Arbitration: ctrl30_mandarbit = “Y”
Mill: ctrl30_mandmill = “Y”
Payment Terms: ctrl30_mandpayterms = “Y” (or “P” or “S” = contract type)
Terminal: for purchase and ctrl30_mandmill = “Y”
Costs: ctrl30_estmatmandatory = “Y”
Trust Date: ctrl30_mandtrustdate = “Y”
Quality Code: ctrl30_mandqualcode = “Y”
Admin Terms: ctrl30_paritypt = “Y”
Admin Terms: ctrl30_mandvaln = “A”
Admin Port: ctrl30_mandvaln = “A”
Admin Terms and Port: ctrl30_mandadminterms = “Y” or ctrl30_mandvaln = “A” and ctrl30_mktprstyle is blank.
Valuation Commodity, Period, Currency and Price Code: ctrl30_mandvaln = “Y”
Certification Code: ctrl30_mandcert = “Y”
Department: ctrl30_manddept = “Y”
LC Due Date: ctrl30_mandlcduedate and LC payment terms are indicative
Market Zone: ctrl30_mandmktzone = “Y”
Trader: ctrl30_mandtrader = “Y”
Contract Price: ctrl30_mandconprice = “Y” and not price-fixing method.
Original Valuation Month: ctrl30_mandhedgemonth = “Y” and not price-fixing method
P/Fix Prem/Disc (Basis): ctrl30_mandbasis = “Y” and price-fixing method
Quantity: ctrl30_mandconquan = “Y”
Contract
On the contract tab information regarding the counter party, product, quantity, delivery/shipment period, contract terms and payment terms may be entered. Some information such as counter party is mandatory and the contract may not be created until the mandatory fields have been populated. Much of the input will be in the form of codes (ITAS menu options PHYSCODES, CLI). The accuracy of data and the set up of code descriptions will help in the creation of documentation.
Pricing
For physicals trading where terminal markets exist there are four types of pricing. These are Flat, Terminal/Futures based Pricing, Pricing from a Start date, Pricing from Bill of Lading date. For non-Terminal physicals Flat pricing exists, and these prices can be qualified as being Provisional, unpriced, spot etc.
All Pricing - requires currency and price code and payment style.
All pricing against Terminal markets requires the market, prompt month, lots to price, method of fix/pricing. The methods include DEO (Double executed orders) which requires special understanding of their operation. A DEO uses 2 terminal markets for ascertaining a white premium, the premium is calculated by extending the DEO trades to their full $ value and applying the conversion factor of the target Fixing market to get the premium expressed as cents per lb, PMT etc.
A DEO example is; Purchase TRADE 500LT, fix to NY11 Oct00 (10 lots) with L5 Oct00 for premium calculation. TERM deal 0001 L5 -10 lots @ 220, deal 0002 NY11 + 10 @ 9.8, TERM FIX deal 0003 NY11 -10 @ 9.9 the extended $ for DEO premium are + (10x220x50) - (10x9.8x1120) = $240 / 10lots/1120 = +0.02142857clb
Automated Pricing from a start date requires the entry of the number of lots to price per day and the start date for the pricing. The fixings will be generated per day using the settlement price of the previous day until all the lots are fixed.
Manual fixings can be entered/viewed using the 'Price Fix' option.
When the pricing has been completed in terms of lots fixed, you can apply the 'Fully fixed' criteria whereby the final price can be adjusted. The DEO premium is then included in the price and you can apply decimal place rounding etc to achieve the final price. This final price is then used in all computations, including Invoicing. The 'fully fixed' flag can be un-set and re-pricing applied, if needed.
Financial
The Financial tab provides the information necessary to ascertain the value of the contract whether it be mark to market or against the allocation. The market price can be entered as a flat price or as a premium/discount against a terminal market. If the contract is to be valued in a currency other than contract currency the facility exists to enter the FX details.
For companies operating the Calculation procedures based on rates set up in CALCCODES the administration value, price and quantity will be displayed.
A facility exists for viewing the contract's P&L at any time. By pressing on the 'Calculate P&L' button the Contract and Market values are displayed and the margin. To see the underlying details for these figures a full report is presented once the 'P&L details' button is pressed. The calculation includes extended contract value (using terminal market closing prices if necessary), cost estimates, commission, hedging, price fixing, allocation value and market value.
Other Costs
Other costs tab include estimates of cost and commission. Any number of agents may be entered with the commission amount, rate or percentage of contract value and a currency.
Cost estimates may conform to a set matrix (see Cost Matrices in PHYSCODES), be entered manually (cost type, rate, amount or percentage of contract value, currency, payable/receivable indicator) or automatically generated if using the Calculation procedures.
Franchise/Tolerance
A contract can be set up with quantity options where a tolerance/franchise and maximum/minimum quantities can be entered.
Commodity options where commodities other than the contracted may be delivered at a premium/discount and cargo options are maintained using mouse right click feature 'Options'
Status
The status tab provides no facility for amendment but presents the current situation of the contract or contract split in terms of allocation, invoicing and insurance.
Quality/Specification
The contract may be amended to indicate a specific quality of the product. ITAS handles commodity specifications for Raw Sugar (i.e. Polarisation calculation) and for Retail/Stock products. This code is maintained in PHYSCODES.
The codes used are:- Analysis to define the specification units, Quality codes to setup a group name and Quality Targets to specify the actual component analysis details for the Quality/Specification code.
For links to 3rd party loading and pumping procedures the quality is used for production of specific target qualities, using the least cost formula process PQIS.
Miscellaneous
The miscellaneous tab provides the opportunity to maintain memo concerning the contract or contract split. Other information that may be updated is the date the contract was issued (this is automatically updated if required from the 'create forms' option), return and reminder dates, transit/consumption indicator and date, import duty and other miscellany.