Dynamic Schedule Management
Fairways Debt is built around the schedule engine, that computes payments using transaction settings, the latest fixings, as well as the latest forward curves.
The schedule engine computes the payments of all types of transactions (except for Manual Loans). This computation is performed:
- When a transaction is initially registered and committed to the Draft Portfolio (the same applies to uploaded transactions).
- In draft mode, whenever the user changes the settings of the transaction (if this change has an impact on the schedule).
- When a workflow action is performed (repayment, index change, frequency change, etc.).
- Every night for transactions based on a floating rate index, to take into account the last fixings and forward curves.
- In the Analysis and Reporting pages, when the user changes the analysis date or uses a market simulation.
Except for the time the transaction is booked, only future and new known payments are recomputed dynamically (past payments are considered as fixed, except for manual amount updates). However, for analysis or reporting purposes, you can make the future start at a past date!
Known payments can be edited to adjust the amount or the rate according to what the counterparty actually noticed (in case of rounding issues, for instance).
Note: The interest rates displayed on schedules and by indicators on reports are calculated from interest amounts. As a result, the accuracy of these rates is affected by the rounding of the currency, depending on the nominal amount. For example, the calculated rate may not be accurate for transactions below 100,000 of nominal in currencies with 2 decimal places, such as EUR, USD, GBP, etc.
Transaction Booking Workflow
To book a transaction into the system, there is a standard workflow which applies to all types of transactions.
A workflow action is an event that happens during the term to maturity of an instrument and that can be booked on actual transactions. Typical workflow actions include early repayments (total or partial), new indexing rules (underlying index or spread), frequency change, etc.
Workflow actions have two dates:
- Trade Date: The date on which the change has been negotiated and should be taken into account by the system. Prior to that date, the action has no impact on the schedule.
- Reference Date: The date the action actually occurs and impacts the schedule (for instance, the payment date for a repayment).
When you change the analysis date on the analysis page, all the workflow actions with trade date later than the analysis date are removed, and all schedules are recomputed accordingly.
All non-derivative transactions can be hedged by a derivative instrument.
This is a many-to-many relationship, which means that a derivative can hedge as many transactions as required, and a transaction can be hedged by as many transactions as needed.
Only additive hedging is supported (notional amounts are added). Transitive hedging is not supported yet.
Note: The interest rates displayed on schedules and by indicators on reports are calculated from interest amounts. As a result, the accuracy of these rates is affected by the rounding of the currency, depending on the nominal amount. For example, the calculated rate may not be accurate for transactions below 100,000 of nominal in currencies with 2 decimal places, such as EUR, USD, GBP, etc. This limitation applies to the calculation of the current rate (allocation included).
You can add one or more tags to transactions. Tags are user specific and cannot be shared. They are useful to group transactions together for analysis and reporting purposes. They are especially helpful to integrate simulated transactions into a report or analysis dashboard.
A transaction can be booked both with an external counterparty, typically a bank, or an internal counterparty, i.e. an entity within the organization that has been configured to act as a bank. The latter type is called internal transaction.
Internal transactions display in the portfolio in two directions:
- A liability for the borrowing entity
- An asset for the lending entity
If the current organization includes both entities, internal transactions will display twice in the portfolio (as an asset, and as a liability).
Users can create specific events for each transaction, in order to be notified by Fairways Debt when the event is about to happen.
It is recommended to create events that are related to the term to maturity of the transaction.
- Users who have the rights to see the transaction can see the related custom events.
- Users who have the rights to edit the transaction can edit the related custom events.
Notifications will be sent to the user only if the event was created AND notifications have been configured for the event type.
Notification rules can be configured according to the event type.