TRS - Treasury Trade Maintenance

What is TRS

Hivedome will set-up the environment that the operating company needs with any of the tools available for Treasury operations in ITAS i.e. FX, L&D, Bonds, FRA, Currency Options. There are several variations of FX operation and detail discussion between Hivedome and the Operating Company will ascertain the best match for your type of operation.

FX

Single or Double entry is permitted, double is only usually applied in a bank/brokerage business where there is a need to keep Bank and Client sides separate..

Orders can be created/maintained/cancelled/confirmed (S01 activation).

Contract Notes can be produced, in the company own (DOCDES) design.

There is an Import process that enables new business to be added, only when Single side entry.

Roll, Swap, allocate/splitting are handled.

Client and Bank/Broker limit checking can be activated.

Accounting entries can be generated; there are several different styles for posting. The entries can also be created in bulk (at day-end) or on-the-fly. Entry of a matured deal (date less than ITAS date) will generate accounting immediately i.e. on-the-fly.

Any deal can be modified prior to it’s maturing. Thereafter there are tight controls to control any activity. Deals can be deleted, recall and right-click feature, after any TRADE assignments have been removed.

There are many variations for handling commissions; pippage, rate of $ equivalent traded, flat amount per trade.

Deposits (CLI static needs to be setup) and Variation Margins can be calculated and included in the EQUITY report.

Various FX oriented reports TRSQ, TOPEN and FXREPS are available as well as the ReportWriter process. Historical/settled/matured trades can be viewed and analysed for perpetuity.

Assignment of FX deals to TRADE (Goods and Costs) and LICS can be set up.

FX Import

This process is only available when the company is operating Single Side entry.

The user is prompted for a path to a .csv defined import file. The file contents are row 1/cell 1=wording ‘trs01’. Row 2 cells will define the field names to be imported e.g. trs01_broker whereby the cell content will be broker i.e. no prefix wanted. The mandatory list of fields to create a valid FX deal are bs, account, dept, ccy, othccy, amount, othamt, roe, roetype, cdate and mdate. Individual rows will be rejected with their invalid data message in the form i.e. there is no report produced. Note beware that NOM account numbers are 9999.9999 format and can begin or end with 0 character which in standard excel/csv will default to numeric cell content and will drop those leading and trailing zero and will thus invalidate the checking of NOM account, you need to define that cell as text type. Orders can be downloaded with Row 2 cell = 'status' and apply 'V' in the data cell

FX Roll

The process is to recall all the non-matured FX deals (maturity is after midnight on maturity day) for an account and allows you to roll in full or part. Dates and rates need to be entered and the 2 day spot is the default maturity date.

FX Accumulators (Price Mechanism)
PRICEMEC maintains details of each Accumulator. The Process Accumulators option will enable FX Accumulators which are past their Expiry Date to be converted into FX deals based on the notional amount, FX Rate, Knockout Rate and days to Put and Call (sell to bank) the daily amount. PRICEMEC has various Views on its' associate data including FX accumulators, Settled and Open.

Loans & Deposits

The view of these TRS deals is that a LOAN is from the trading account to the Funding Account (either the Operating Company or a 3^rd party). A DEPOSIT is viewed as the opposite i.e. from Funding account to trade account. These instruments are useful in Physicals trading where a trade could be financed explicitly with a bank loan/advance and the operating company needs to track the performance i.e. when to repay and how much interest has been incurred. The accounting handles inception, redemption and interest payments. TRS also monitors the total exposure with specific bank/brokers, applying limits (maintained in CLI). An alternative design for loans administration is by entering brief details in TRADE records with the BANKRVU procedure consolidating from both TRS and TRADE with the account limits/lines providing available line. Simple reporting is achieved using TRSQ and ReportWriter.

The feature needs to be activated by Hivedome, and Interest Payable and Interest Receivable accounts (NOM) need to be nominated.

Bonds

TRS records Bond purchases and sales in full or part. The design is not a full bonds trading system but a simple record keeping on behalf of House accounts and other 3^rd parties. These can be linked with the securities held procedure SECSHELD. There is a commissions element for these purchases which does allow for 3^rd parties to be charged. Simple reporting is achieved using TRSQ and ReportWriter. There is no inclusion of Bond business in EQUITY/CLIDOC etc.

Currency Options

Double or single entry is handled, premium postings are handled through a suspense P&L account, the recording and the tracking of the options performance (OTHINS + FXREPS) is available, providing the forward spread FXR rates have been entered.

Simple listing of Trade records is handled by TRSQ. There is no integration of currency option business in ITAS P&L processes, EQUITY/CLIDOC etc.

The feature needs to be activated by Hivedome, and a P&L account (NOM) needs to be nominated.

Future Rate Agreements

These are one of many obscure trading instruments. A FRA is a deal to borrow a fixed amount (any currency) over a fixed period at a fixed interest rate BUT the amount/period/rate are negotiated as opposed to the fixed terms of the LIFFE style interest rate futures. The FRA is not the loan but acts as a hedge to protect the interest rate of real loans/deposits. The inclusion of this treasury instrument demonstrates the flexibility of ITAS to handle any derivative. Listing of FRAs is available using TRSQ.

All of these instruments can produce their own ‘contract advice’ for dispatch to the client (see DOCDES.)

Funds Management

ITAS provides a limited administration subsystem for a Funds Management scenario. Typically Portfolio Management, Net Asset Valuation, Risk management and Performance Attribution are the processes that need to be included. Portfolio Management would include instruments such as Equity (SHARE), Bonds (TRS/Bonds), Fixed Income (TRS/Deposit), Futures&Options (TERM) and Derivatives (TRS). Risk Management requires real-time valuations, limits/compliance checks, standard deviation and information ratios. Performance Attribution and style analysis are not handled in ITAS. However because ITAS can administrate a large number of financial instruments, it would not be difficult to extract the performance details that a 3^rd party product would need for Performance analysis.

ITAS/Funds Management would be based on the CLI profile. CLI accounts can be used for all the instruments mentioned. Traders can be assigned to individual deals. Account managers are assigned to CLI profiles with many of the control/performance reporting available at Account Manager/Account level. Deals can be administrated as orders and then completed as executed trades. With online price-feeds e.g. Bloomberg, real-time valuations and account status checks can be setup for continuous compliance checking. CLI can view EQUITY including SHARE value + VM. CLI is also used to view detail and summary SHARE positions and TRS positions/detail. COMMISS reports F&O, CFD and SHARE commission performance. EQUITY has an option to include SHARE trading in it’s reporting.