T3TMM-T24 Money Market

MONEY MARKET
TEMENOS EDUCATION CENTRE
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Copyright 2006 TEMENOS HEADQUARTERS SA 1
Treasury – MM (T3TMM – R6) 1

MM – Product overview
MM
Deposit / Loan
Call / Notice Fixed period
Principal Interest Principal Interest
Fixed Floating Rollover Fixed

Bullet Bullet
Frequency Floating
Manual
Partial Partial Periodic
repayment Liquidate Defer repayment
Automatic
Bullet
Total Total
repayment Capitalisation repayment
Capitalisation
Yes No Yes No
The Money Market module provides dealer and management support for processing
of standard product types in the commercial money market.
The processing in this module is straightforward but flexible.
Interest is always in arrears – cannot be paid in advance even for fixed term
contracts, but it allows fixed or floating type of interest.
The term can be at call or with notice or fixed. For call and notice contracts, interest
schedule is mandatory, but interest payment could be deferred, if need be.
Whenever interest is liquidated, it could be capitalised or not.
Though the principal repayment is bullet and manual scheduling is not possible,
principal increase and decrease, one at a time, could be indicated with a value
date. Further, Payment and receipt functions allow for partial or total repayment of
the contract also.
Contracts can be matured, or rolled over into a new deal period.

MM Dependencies
• All Business applications will make use of the following T24

functionality:
– CUSTOMER
– ACCOUNTS
– DELIVERY
– ACCOUNTING
– LIMITS, and
– other STATIC TABLES
These applications were discussed in ‘T24 User Introduction Course’. You will now
see how they are integrated with MM module.
We need to have Customer records to refer the counter party. We need accounts
for draw down accounts and liquidation accounts.
While loans could be given after setting up limits (and collateral if we attach
collaterals to limits), it is possible to do so without creating limits also. When the
override message notifying the absence of any limit is overridden and the record is
authorised, the system will automatically create a default limit for the customer for
the product.

MM Dependencies – Product related
• The category codes are shared with Loans and Deposits module.
The ranges are hard coded.
– 21001 - 21029 Deposit
– 21030 - 21039 Taking
– 21040 - 21044 Fiduciary Deposit
– 21045 - 21049 Sundry Deposit (No Interest)
– 21050 - 21074 Loan
– 21075 - 21084 Placements
– 21085 - 21089 Fiduciary Placement
– 21090 - 21094 A/C Receivable (No Interest)
This range of CATEGORY codes is shared with the Loans and Deposit module.
Care should be taken when defining additional sub-classifications that sufficient
detail does not already exist to provide the required breakdown. For example, you
should not define separate CATEGORY codes for resident and non-resident
customers or for local and foreign currency transactions, since this information is
already available on an individual prime record.
Sundry deposits and Accounts Receivable are for
- Monies that we cannot deliver immediately
- Funds that we are expecting shortly

MM Dependencies – Interest related
BASIC.RATE.TEXT
Floating interest
BASIC.INTEREST
Possible to set a negative interest rate for MM

A contract may be set to allow negative rate or not
Also possible to give a negative spread
The interest rate works out to –7.75% in this case
If Negative rate not allowed, and spread is +2.5,
effective rate will be +2.5%
In the field Negative.Rate in MM, the values can be ‘YES’, ‘NO’ or Null. If set to
YES, this would enable negative interest rates to be input in the following fields :
(i) INTEREST.RATE
(ii) MIS.INTEREST.RATE
(iii) NEW.INTEREST.RATE (when subsequent rate amendments are to be made in
a contract)
(iv) In case of contracts where INT.RATE.TYPE is FLOATING , Interest key with a
negative rate can also be stipulated in addition to mentioning a negative spread.
The net effect could be a negative interest.
In the case the field is set to NO or Null, the above functionalities will not be
available. If a key with negative rate is keyed and a positive spread is mentioned,
interest will be calculated only for the positive spread ignoring the negative rate.
Any time during the tenure of the contract, if due to changes in the
BASIC.INTEREST key, the interest rate on the contract becomes negative, such
rate would be truncated to 0%.
Once input and authorized, this field becomes non-inputtable. Default value is NO.

MM Dependencies – Interest related
Periodic interest
Bid rate for Deposits

Offer rate for Loans
Offer rate to be greater

than Bid rate
Negative rate input
allowed. Applications to
use them to be specified
(DX,MM,SW)
Generated daily.
Back dated changes possible
In MM, Used for

Automatic Rollover and
Interest tolerance checking
This table is used for “LIBOR” type rates of this nature . Rates vary depending on
the length of time and for Bid and Offer purposes.
For contracts that are set to rollover automatically, this table can be linked for rate
reviews. At the scheduled dates the system will refer to this table and automatically
“pick up” the relevant rate and apply that to the contract until the next review date.
This table maybe automatically updated/interfaced daily with an external feed such
Reuters, or maintained manually by the user.
Periodic.Interest keys are generated daily by the System. It is possible to effect
changes in rates of dates prior to system date.
As a result, all MM contracts which had accessed the (changed) key at an earlier
date, will recalculate interest based on the changed interest rates.
It is possible to stipulate the extent of interest tolerance to be allowed for MM
contracts in the field Int Tolerance. A tolerance entered here will be used to check if
an over-ride is required for any interest rate difference found on any money market
contracts entered.

MM Dependencies – Charges and Commissions
In MM contract, these
Codes
can be input directly
Charges and commissions other than for accounts are defined in

FT.CHARGE.TYPE and FT.COMMISSION.TYPE

MM Dependencies – settlement related
1. CUSTOMER.SSI SPVCN Order can be changed

through ACCOUNT.PARAMETER
2. SEC.ACC.MASTER
Draw down and liquidation accounts
have to be only in contract currency
3. AGENCY
for VOSTRO and CUSTOMER options Interest liquidation account can
be in currency chosen in Int Ccy field
Both the currencies should have
4. CUSTOMER.CCY.ACCT
been pre defined as Equivalent Ccys
and Interest should not be capitalised
5. NOSTRO.ACCOUNT
Exchange rates of Int Ccy Mkt applicable
INTERNAL SUSPENSE ACCOUNT

(as defined in Account.Class under
SUSPLMMCR / SUSPLMMDR)
The defaulting order is called SPVCN – Settlement, Portfolio, Vostro, Customer and
Nostro.
The defaulting process for Draw down and liquidation accounts looks firstly at the
CUSTOMER.SSI for standard settlement instructions. If no default found, looks at
SEC.ACC.MASTER record using the portfolio no, If no default found, uses the
AGENCY record of the customer. If the Auto route bank is called Vostro or
Customer and Vostro Account or Customer’s account are mentioned then they are
used. If not present, then CUSTOMER.CCY.ACCT is searched for the first account
of the customer in that currency. If no default is found, looks at the
NOSTRO.ACCOUNT table. These settings can be overridden by using
ACCOUNT.PARAMETER to set the account default method. Alternately, an Internal
suspense account as defined in Account.Class could be defaulted
The Agency File contains settlement details of major customers and all banks
irrespective of whether there is any business connection. This information is entered
centrally to supply Automatic Routing instructions for remittances/cover to all banks
and customers with whom the Bank has numerous dealings. This eliminates the
need to re-enter the details at transaction level.
Many banks may have different Nostro accounts in the same currency to settle for
different products. T24 supports this kind of requirements by allowing for banks to
maintain Currency-wise Nostro account records for different products

MM Dependencies - Currency related
COUNTRY
HOLIDAY
CURRENCY.PARAM
CURRENCY CURRENCY.MARKET
While inputting a contract, the holidays for the country of the dealing
currency will be checked for scheduled activity and suitable overrides
generated
The Interest Day Basis will be defaulted from Currency table to the
transactions. Possible to change at contract level
The Holiday table will be used to check whether the maturity and/or other scheduled
activity date is a working day or not at the time of inputting a contract. Interest day
basis will be defaulted to the transaction records as per the currency used.
Possible to change at contract level.

MM dependencies – Currency related
• Different Interest day basis for calculation of interest possible

depending on the methods followed for calculating number of
days and days in a year
– Basis "S" can be used for providing a
– special interest amount
• like rounding to the higher tens.
– Possible only for Fixed interest type.
– Interest amount proposed is also entered
– along with fixed interest rate
– An override will be required where the tolerance is greater than
1%; and a variance greater than 5% will be rejected
If basis "S" is used then the system will require an entry in field Tot Interest Amt.
The amount entered will be compared with the likely interest arising out of the
interest rate entered.
Maximum tolerance allowed is 5%. An override will be generated where the
variance is greater than 1%; and a variance greater than 5% will be rejected

Application specific Parameters

MM - Parameter tables
• The Parameter tables to be set-up during implementation are

given below:
– LMM.INSTALL.CONDS
– LMM.ACTIVITY
– LMM.ADVICES
– LMM.TEXT
– MESSAGE.CONTROL
– ACCOUNT.CLASS
• Implementation methodology BRADDs can be used to set up
these tables

LMM.INSTALL.CONDS
• Common parameter table for LD and MM.

• Major groups of fields relevant to MM are
– Days before reports
– P & L category codes to be used
– Accrual cycle for contracts in local and foreign currencies
• Daily or monthly
– Accrual cycle for floating rate contracts
• Daily or on rate changes
– Default charge code to be used
• IM BRADD – Treasury - General information and Accounting can
be used
Main parameter table that is common for LD and MM modules.

Consists of six major groups of conditions; e.g. Interest Accrual cycles, P & L
categories, default interest tolerance % on MM contracts.

LMM.INSTALL.CONDS
• Other important fields

– Whether additional advice required when a contract to be
rolled over is amended
– Whether MT202 message needed instead of 103 if the
counterparty is a non-bank
– Mandatory and subsequent No input fields
• Possible to indicate which are
– Mandatory fields for the front desk (Multi value field Mand Flds)
– No input fields for the back desk (Multi value field T Noinput Field)
– Interest tolerance
• In the absence of Interest tolerance value in PERIODIC. INTEREST
record, interest rate entered in Int tolerance field here can be used to
check variance between MM contract rate and market rates
For money market contracts, when a rollover is scheduled, a rollover advice is

scheduled through activity code 1070. If such a contract were to be amended
pending roll over, additional advice with activity code 1020 for amendment advice
can also be generated.
A tolerance entered here will be used to check if an over-ride is required for any
interest rate difference found on any money market contracts entered.

LMM.ADVICES
• The various events in the life cycle of a MM contract are hard

coded and detailed in LMM.ACTIVITY
• In LMM.ADVICES, we can specify, product wise, the type of
advice (s) to be produced for any activity.
• For some activities, it is possible to produce the advices prior to
the activity – like advice to claim Principal / Interest /
Commission.
• IM BRADD – Treasury – Advices can be used
The LMM ADVICES table specifies, by product type, the activities for which
confirmations/advices should be produced. i.e. the User can choose whether or not
he wishes to have a confirmation/advice produced when an activity occurs on a
particular type of contract.
There must be an advices record present for the default Category Code for each
product range. For example, for the product range 21-001 to 21-039 there must be
an LMM ADVICES record with the key 21-001.
List of applicable activities- New Contract N 1020 Change of Contract N 1030
Cancelled Contract N 1040 Liquidation of Contract N 1050 Early Liquidation of
Contract N 1060 etc
The last digit of the any of the codes, used by the System, may also be 1, 4, or 8.
These other codes represent the same activities as those listed above, and
therefore,have the same descriptions. The reason for the alternative last digits is to
differentiate between Fixed Contracts (xxx0), Call/Notice Contracts (xxx1), and
Syndicated Contracts (xxx4) and (xxx8) for S.W.I.F.T. purposes.

LMM.ADVICES
• Other ways in which this table can be put to use are :
– Fair value interest rate can be picked from Periodic.Interest

and defaulted into MM and LD contracts, by inputting ID of
PERIODIC.INTEREST in field Fv Rate Key and / or Fv Margin
Key
– Option to mature Money market deals at Start of day by

inputting Yes in field Mature Mm at Sod
Clients may maintain a set of benchmark deal rates for MM and LD contracts that
could be used to denote a fair value. This rate can be used to gauge variations in
agreed deal rates. This will commonly be a standard published borrowing or
lending rate available through Reuters or other rate dissemination media.
If a rate is identified, it must first be set up in PERIODIC.INTEREST
This field is a link to the PERIODIC.INTEREST table and the record to use depends
on the currency of the contract so if a value of 01 is entered here then a USD
contract will look for a record such as 01USDYYYYMMDD.

LMM.TEXT
• When settlement instructions of counter party are not known, the
proceeds are kept in internal suspense accounts. The advice
text printed on confirmations are specified in LMM.TEXT. The id
of the record is the Category code mentioned in
ACCOUNT.CLASS for SUSPLMMCR and SUSPLMMDR.
LMM.TEXT : table of advice texts which are printed on confirmations when

settlement information, in respect of a contract counter party, is not known:
Only two records may be created on the LMM.TEXT table, viz text relating to
payments and relating to receipts. The ID of these 2 records are category codes
contained in ACCOUNT.CLASS (viz. SUSPLMMCR and SUSPLMMDR)

MESSAGE.CONTROL
• The MESSAGE.CONTROL table contains the basic message

control values for passing through to the delivery system
whenever an application requests the delivery of an
advice/confirmation or payment.
• The MESSAGE.CONTROL table allows the User the flexibility of
specifying various combinations of priority status (normal, urgent
or priority) and delivery method (Swift, Telex or Print)
• On Sundries and Account Receivable the Delivery link must
specify PRINT or TELEX device because SWIFT confirmations
require interest conditions (MT320).
The MESSAGE.CONTROL table contains the basic message control values for
passing through to the delivery system whenever an application requests the
delivery of an advice/confirmation or payment.The delivery of these items can be
specified on a transaction by transaction or contract by contract basis by input into
the delivery link field on the transaction or contract.
By far the largest number of contracts would call for standard delivery i.e. Delivery
Link 1, which relates to the record 1 on the MESSAGE.CONTROL table. However,
there may well be times when a User wishes to specify other than standard delivery,
for example, for a particular customer, the User may want the delivery message to
be sent as urgent or priority or the User may wish to specify that a delivery message
be sent by a particular method such as Telex or Print.
In this case the User must set up a record on this table (e.g. record 2) with these
parameters and then input delivery link 2 in the transaction or contract.
Thus the MESSAGE.CONTROL table allows the User the flexibility of specifying
various combinations of priority status (normal, urgent or priority) and delivery
method (Swift, Telex or Print). He would then input the corresponding delivery link
code when loading up a transaction or contract and the system will then apply the
delivery method specified on the MESSAGE.CONTROL file corresponding to that
delivery code.

MM Build sequence
1. ACCOUNT.CLASS Mandatory
Records
SUSPLMMCR, SUSPLMMDR Optional
MERGEMM
2. LMM.ACTIVITY
3. MESSAGE.CONTROL
4. LMM.ADVICES LMM.ACTIVITY
LMM.CHARGE.CONDITIONS
5. LMM.INSTALL.CONDS For LD default Charge /
Commission code
ACCOUNT.CLASS
6. LMM.TEXT SUSPLMMCR, SUSPLMMDR
The order in which these files should be created is stored within the automated tool
for IM. For easy reference, the order sequence in the ascending build reference
order is given in the left.
The values required for population of the tables will be obtained from information
analysed within the BRADDS.
The mandatory and optional files are shown by different colour codes.
Wherever there are dependencies for filling up values in the tables in build
sequence, the dependencies are shown on the right.

MM – Product features

Products handled
• MM.MONEY.MARKET - primary application to process Loans

as well as Deposits of a bank .
• MM.PAYMENT.ENTRY and MM.RECEIPT.ENTRY to effect
principal increases and decreases
• Assets include Loans, Placement and Account Receivable
• Liability products include Deposits, Taking and Sundry deposits
• Multi-level input allowed
– basic deal inputs at front office
– full settlement instructions and,
– confirmation matching for customer and broker at back office
The MM module caters to the two major activities of a bank viz. Accepting Deposits
and making Loans. Credit activities are covered under contract products like LD,
MG, MM or Account and AZ Accounts. The first stage in implementation would be
to analyse the business product of the bank and identify which of the above
application is best suited to handle that product.
The MM module supports a range of products – both asset and liability types. All
the products can be on a fixed term, call or notice basis. Interest bearing products
can have fixed interest or floating interest linked to a base rate via a key.
DEPOSIT is a contract to receive funds from a client. TAKING is a contract to
receive funds from a Bank or other financial services counterparty. SUNDRY
DEPOSIT is a simple one-shot deposit WITHOUT interest. Its purpose is to allow
the bank to record amounts due to clients without having to pay interest. This can
accommodate items such as payments due to clients in a currency for which the
client has no account.
LOAN is the extension of credit to a client. PLACEMENT is a contract to place
funds at a Bank or other Financial services counterparty . ACCOUNTS
RECEIVABLE is a simple one-shot loan without interest. Its purpose is to allow the
bank to record amounts or miscellaneous items owing from clients without having to
pay interest; this can accommodate items such as overdue payments, charges etc.

Product features
• MM application can be used for Straightforward but flexible

processing
– Interest
• Always in arrears.
• Allows Fixed or floating
– Term
• Call, Notice or Fixed
– Repayment
• Partial or total.
• Also possible to roll over into new deal period
– Brokerage
• With or without
The Money Market module provides dealer and management support for the
processing of the standard product types in the commercial money market.
The processing in this module is straightforward but flexible.
Interest is always in arrears – cannot be paid in advance even for fixed term
contracts, but it allows fixed or floating type of interest.
The term can be at call or with notice or fixed.
Payment and receipt functions allow for partial or total repayment of the contract.
Brokerage calculation and processing is available via the BROKER application.
Contracts can be matured, or rolled over into a new deal period.

Product features - Schedules
• Automatic schedule
– Bullet type of payment for principal at the end
• Can schedule increase / decrease or effect adhoc repayments
– Interest at the end or during roll over

• At the time of roll over, interest could be paid or capitalised
– Periodic Interest frequency for Call and Notice mandatory

• If interest is not proposed to be paid, then could be deferred.
• If interest is proposed to be liquidated, then could also be capitalised

Product features - Tenor
• FIXED:
– Maturity date is a specific date
– It can also be entered as number of days (D),
weeks (W) or months (M) from the value date.
• CALL/NOTICE:
– Maturity date is a number in the Range 0 to 999
– 0 = Call
– 1 to 999 = Number of Days Notice.
– For sundries and Account receivables, only Call maturity
accepted
• Holiday table of country of currency involved in the transaction
will be checked to ensure maturity date is a working day
To input a fixed final maturity date, in field FIN.MAT.DATE, using the abbreviation
D, W,M etc it is necessary to complete BUS.DAY.DEFN. This will be the
country(ies) whose holiday tables will be checked to ensure the maturity date is a
working day in that country. On validation it will default to the country of the
currency of the contract, however the user can override or use the multi value field
set to check more than one holiday table.

Product features - Interest Types
• FIXED 1
• FLOATING 3
• NONE 9
• Periodic interest could be used while rolling over.
• Rollover int rate field could have :
– 'Pnn', 'PnnB', 'PnnO' or 'PnnS' where
• P - signifies that the Periodic Interest Table to be accessed
• nn - the Sequence Number on the Periodic Interest Table.
• B - 'Bid' Rate must be used ; O - 'Offer' Rate must be used
• S - INT.SPREAD.1 value will be applied to the Periodic interest rate for
fixed rate contracts.
FIXED: Where the rate of interest to be charged over the life of the contract is fixed
at a specific percentage at the inception of the contract. This type of rate will require
the input of the interest rate
FLOATING: When the rate is liable to change over the life of the contract from time
to time depending on the changes in anchor / reference rate. Interest key field is to
be used and Interest spread if any fixed spread is to be applied on the floating rate.
NONE: No interest. Applicable for Sundry or Account Receivable.
While rolling over a contract, Rollover Int rate field input can also be made in the
format 'Pnn', 'PnnB', 'PnnO' or 'PnnS' where:
P - signifies that the Periodic Interest Table has to accessed to get the new Interest
rate on the Rolled Contract for the New Maturity Date.
nn - Signifies the Sequence Number on the Periodic Interest Table.
B - Signifies that the 'Bid' Rate must be used from the Periodic Interest table.
O - Signifies that the 'Offer' Rate must be used from the Periodic Interest Table.
It is to be noted that if the Input is in the format Pnn only (with 'B' or 'O' at the end),
the Bid Rate will be taken for Deposit Contracts and the Offer rate will be taken for
Loan contracts
S - Signifies that the INT.SPREAD.1 value will be applied to the Periodic interest
rate for fixed rate contracts.

Workshop - 1
• Input in the front office, a deposit of USD 100,000 for a period of

3 months at a fixed interest of 2%. Use your counterparty and
dealer desk created earlier. Do not authorise the transaction.
• The customer desires that the principal should be repaid to
another account with your bank. He also wants the interest to be
paid to his account with another bank. Make suitable changes in
the settlement details as back office input.
• Get the record authorised. Look at the accounting entries
created by using Enquiry TXN.ENTRY and STMT.ENTRY and
CONSOL.ENT.TODAY files.
• Look also at future dated STMT.ENTRY. Use ENQ NOSTRO.
FWD.BAL to look at forward balance position of your account

Workshop - 2
• Make a placement of USD 1 million with Allied Irish Bank

(Customer No. 100000) for 3 months.
• The placement is at a floating interest of Base rate minus 1.25
percent. Interest is to be paid in GBP.
• Make the placement through your Broker.
• Look at ENQ LIAB for the customer after authorisation
• Look at the delivery messages produced
• Look at the accounting entries for brokerage paid.

Workshop - 3
• For the Money market dealer desk you are using, and for USD
currency, look at the enquiries
– PM.CAS for the cash flow and
– PM.GAP for the break-even rate upto which 3 month deposits

could be raised to square the position.

Workshop - 4
• For the customer to whom you had sanctioned time banded MM

placement limits of 1 million USD in Workshop – 3 of Introduction
session, input the following loans
– Call loan of USD 300,000 with a floating interest rate with a spread of
0.5 per cent. Defer the interest.
– 10 day notice loan of USD 300,000 with a fixed interest rate of 4
percent. Liquidate the interest but capitalise.
– For both the loans give a interest payment frequency of twice a month
(TWMTH).
• Look at the impact on time banded limit record
• Try to look at the Forward Stmt.Entry for both transactions as you have
deferred interest in one case and capitalised interest in the other.
• Look at system maintained LMM.SCHEDULES for the next interest
event
• Look at Enquiry PM.GAP and through Enquiry PM.INT observe the
effect due to change in interest rates by –1, +0.5 and +0.75

Workshop - 5

placement limits of 1 million USD, input the following loan
– Term loan of USD 250,000 for 4 months with a floating interest
rate with a spread of -0.5 per cent.
– Observe the override and authorise the transaction. See the
effect on time banded limits.
• Set the loan for auto rollover at the end of four month period for
every month. Fix the final maturity as 12 months. The interest is
also to be automatically capitalised.
• Collect LOAN charges from your customer’s GBP account.
Authorise the record with these changes.

Workshop - 6
• Accept a deposit of USD 25,000 from your customer for 12

months with an initial interest rate of -3% by allowing negative
interest
• Set it to be automatically rolled over after every 2 months.
Interest to be picked from PERIODIC.INTEREST with a spread
of 0.5%
• Look at the forward STMT.ENTRYs
• Look at the Enquiries MM.UNCONF.BROKER and
MM.UNCONF.CPARTY.
• Mark a broker deal as One sided

Product features
• On Sundries and Account Receivable, the Delivery link must
specify PRINT or TELEX device because SWIFT confirmations
require interest conditions (MT320)

Workshop - 7
• Input a sundry loan for your customer for USD 5,000.
• Input minimum details and after committing, look at the System

defaulted fields

Product features
• Amendments to Contracts
– Interest Rate / Spread
• When rolled over
– Charges
• Can be collected any time
• Manual Rollover
– Enter new maturity date in New Matur Date field
– Old maturity date defaults as date for rollover in Rollover date
field
– Rollover Marker field has two options
– 1 - Maturity date extension (No interest action)
– 2 - Rollover with interest settlement (Liquidate or Capitalise)
The MM module can be used to effect simple one-shot contracts for clients with
settlement of principal and interest being made at maturity. However these type of
contracts may require rolling over for further periods. The Money Market module
has the functionality to do this process manually as well as automatically.

Workshop - 8
• Pick out the contract opened in Workshop - 1.
• Extend maturity by 3 more months.
• Reduce Principal by 50,000 and increase interest rate to 3% with

effect from the rollover date
• After authorisation, see the changes in the Interest and the Prin
Amount

Product features
• Payments before maturity

– For simple cases
• Prin Increase and Incr Eff date fields could be used for partial
repayments
• Maturity date field could be amended for full repayments
– MM.RECEIPT.ENTRY
• Used when Counterparty prepays loan principal or interest or both
• Value date is either today or before today
– MM.PAYMENT.ENTRY
• Used when Counterparty requests prepayment of Deposit
• Is for Principal only
• Value date is either today or before today.
• Also contains details of any automatic payments made
This function can also be used to acknowledge receipts AFTER due dates. After
authorisation, all necessary files are updated, accounting/ limit entries are passed
and the delivery system is called to send an appropriate advice/confirmation where
necessary. Once a receipt entry has been authorised, it cannot be changed. Any
error will need to be corrected by the Reversal of the receipt entry and a new input
with the correct information. Only the last entry receipt can be reversed. This
application will not allow the processing of receipt entries for contracts which have
been defined with the INTEREST BASIS equal to 'S'.
The Payment Entry Function provides the user with two major facilities: (i) Input of
'manual' payment entries (ii) Display of both manual and automatic payment entries.
Input of Manual Payment Entries: This facility can only be used for Liability type
contracts (except Fiduciary Deposits), that is, where the user bank pays funds to a
counterparty in respect of a deposit made by that counterparty and where the funds
in question are paid away for any date other than the normal scheduled action due
dates on that contract.
Money Market contracts are always liquidated automatically on scheduled due
dates and so this application can be used PRIOR to the due dates to register a
prepayment of principal. Only Principal amount can be prepaid in the
MM.PAYMENT.ENTRY facility.

Workshop - 9
• Early mature the deal opened in Workshop –5.
• Maturity date is 10th of next month.
• Collect EARLYMATMM charges.
• After authorisation, see the change in the Tot Interest Amt field
• View the scheduled events of the contract using Enquiry

MM.ETD

Workshop - 10
• Through MM.PAYMENT.ENTRY, look at some of the automatic
payments that have happened in Money market

Product features
• It is possible to merge secondary contracts with a primary contract if

they have the same counterparty, category, currency and maturity.
Merging will take place when the secondary contracts mature and the
primary contract rolls over. Merged amounts will be recorded as
separate principal increases
• Merging will take place via a Suspense account which should be set up
in ACCOUNT.CLASS record MERGEMM
– For example in the case of merged deposits the secondary contracts
will have the principal and/or interest liquidation accounts set to the
merge suspense account for the relevant currency. When the contract
matures the suspense account will be credited. When the amounts are
merged into the primary contract the suspense account will be
debited.
• Also possible to perform a normal principal increase on rollover on the
primary contract. In this case the actual increase applied will be the
total of the principal increase, the merged amounts plus any interest to
be capitalised from the primary contract.
The facility enables customers who wish to merge several contracts of the same
type with the same maturity into one contract by having one contract roll over (the
primary contract) at maturity and applying a principal increase for the total of the
principal and/or interest to be transferred from the maturing (secondary) contracts.
It is also possible to perform a normal principal increase on rollover on the primary
contract in this case the actual increase applied will be the total of the principal
increase, the merged amounts plus any interest to be capitalised from the primary
contract.
Additional principal increase accounting entries will be generated for the total of the
merged amounts.
Merging will take place via a Suspense account which should be set up via the
ACCOUNT.CLASS record MERGEMM.

Workshop - 11
• For your customer, input a deposit of USD 25,000 for 4 months

at a fixed interest rate of 5%. Mark the liquidation accounts as
internal account meant for Money market merger.
• Input another deposit of USD 25,000 at a floating interest rate.

Set this for an automatic roll over every month at the end of 4
months and upto one year.
• Authorise the contracts.
• Now, merge the first contract with the second contract

Workshop - 12
• Use Enquiry PM.IRE to view the resulting P&L if the interest rate
were to move down by 1%. Use CAS selection for your dealer
desk for USD
• Use Enquiry NOSTRO.POSITION to view actual balances of
current and the next four days of USD
• Drill down to Enquiry NOSTRO.FWD.BAL to view the value
dated balances
• Use Enquiry NOSTRO.FWD.BAL.DET to view complete details
of cash flow of USD in the Nostro account drilled down in the
previous enquiry
• Use Enquiry PM.DPAL to view the discounted unrealised profit /
loss flow for your dealer desk. Use CAS

Product features - Others
• COB input
– New MM contracts can be input during COB provided NS has been
installed
• SOD maturing
– MM deals can be matured at start of day so that customer has access
to funds from a deposit and liable for a loan at the start of day on
maturity
• Mature at SOD field in a contract can get default value from LMM.ADVICES or
inputter exercises option by filling Yes / No
• On line maturing
– Back-valued contracts can be matured during the day if the
background phantom is running
• Through Function Verify in EB.PHANTOM for record MM.ON.LINE.MATURITY
– All accounting entries passed during the day but delivery messages
will not be produced

Product features - Others
• Tax on deposits
– Could be collected by inputting the pre-defined TAX code in the Tax
Interest Key field. System calculates tax on interest and populates the
value in Tot Int Tax field. Beneficiary will get interest less this tax. Tax
amount credited to internal account defined in TAX record
– To default TAX code
• Possible to set TAX.TYPE.CONDITION in which different Tax codes could be
linked to different groups defined in APPL.GEN. CONDITION. Then Tax Type
Condition Id could be input in Tax Interest Type field
• USGAAP reporting
– To obtain a Fair value interest and Fair value margin, it is possible to
indicate PERIODIC.INTEREST table id in Fv Rate Key and Fv Margin
Key fields.
– To obtain these values by default, it is possible to indicate them at
LMM.ADVICES for each Category code
When a tax key is included on a new deposit contract record at the field
TAX.INTEREST.KEY, the system will then refer to the tax table where it will find the
tax rate which corresponds to that key. The system will then calculate tax due at a
FLAT RATE on the amount of interest on the contract and will display the resulting
amount at TOT.INT.TAX field. For tax keys with multiple tax rates, only the first tax
rate of the key will be taken into consideration for the tax amount calculation.
When the interest amount is liquidated, the proportion due in tax is automatically
deducted and the counterparty to the contract will only be paid the net amount.

Product features - Accounting
• The accounting entries passed for Money market deals are

mostly Non Contingent in nature, except when the value date is
forward
– STMT.ENTRY and CATEG.ENTRY passed for Debit / Credit to
Accounts and Interest and Charges
– CONSOL.ENT.TODAY passed online when new contract is
authorised. RE.CONSOL.SPEC.ENTRY is passed during batch
job
– Asset types used are
• FORWARDCR, FORWARDDB, LIVECR, LIVEDB, Interest accrual
Category codes from LMM.INSTALL.CONDS
– Transaction codes 400 – 499 are used
– RE.TXN.CODES used are FNW, FRP, ACC, LNW, LIN, CAP,
MAT, REV, CUS, APP, TAB

Accounting entries for a MM Deposit
US$ 1 M deposited at spot (2 days forward)

for 3 days earning US$ 2,500 per day
MM Contingent A/C CUSTOMER A/C
1,000,000 1,000,000 1,000,000 1,000,000

Value Date Transaction Date
7,500
Value Date Maturity
Forward CR
RE.CONSOL.SPEC.ENTRY STMT.ENTRY
MM Liability A/C Interest Payable Interest Expense P&L
1,000,000 1,000,000 7,500 2,500 2,500

Maturity2,500 2,500
Maturity Value Date 2,500 2,500
Accrual Accrual
PL Category 50XXX
Live CR LMM.INSTALL.CONDS LMM.INSTALL.CONDS
RE.CONSOL.SPEC.ENTRY RE.CONSOL.SPEC.ENTRY CATEG.ENTRY
When a Money Market contract is first captured onto the system, for example a
Taking, then it generates a consolidation credit entry of a FORWARDCR
Contingent Liability position for the contract principal.
When the Money market Taking deal starts the following entries are generated:
a consolidation entry to debit the FORWARDCR Contingent Liability position for the
principal
a consolidation entry to credit the LIVECR liability type
a statement entry to debit the Nostro/ Customer account supplying the funds for the
deal.
The daily accrual process will generate
a Profit and Loss entry to debit P/L Interest Expense for the daily interest
a consolidation entry to credit IENP (interest expense not paid) for the daily interest
The contract maturity will generate the following entries
a consolidation entry to debit the LIVECR liability type for the principal
a consolidation entry to debit the IENP (interest expense not paid) for the total
interest
a statement entry to credit the Nostro account returning the deposit principal and
total interest

SWIFT messages supported
SWIFT Description Field Name

MT320 Confirmation for Fixed
period contracts
MT330 Confirmation for Call /

Notice contracts
MT324 Early liquidation
MT350 Liquidation of interest
MT390 Capitalisation of interest
MT103 Bank Transfer - Client When the counterparty is not a Ctpy 202 Msg field
bank, there is option to produce in LMM.
MT 103 or MT 202 INSTALL.CONDS
MT202 Bank Transfer - Bank
MT210 Advice to receive

MM Other features

Money Market Enquiries
• Position Enquiries
– PM.CAS
• Cash Flow / Liquidity Position - daily analysis of net, in & outflows +
cumulative balance including forward interest movements
– PM.GAP
• Interest rate gap and break-even enquiry
– PM.INT
• Interest Rate Sensitivity - Shows P&L effect of increases in interest
rates
– PM.DPAL
• Discounted Unrealised P/L
The Money Market module is an important source of detailed management

information for the production of comprehensive general reports, including,
Cash Flow/Liquidity Position - daily analysis of net, in and out flows plus cumulative
balance including forward interest movements. The ENQUIRY is called PM.CAS
Interest Rate Sensitivity - Show P&L effect of increases in interest rates in steps of
25 basis points to 100, then 200 and 300. The enquiry is PM.INT

Money Market Enquiries
• General Enquiries
– MM.UNCONF.BROKER
– MM.UNCONF.CPARTY
– MM.ETD
• Money Market events enquiry
– NOSTRO.POSITION
• Nostro account balance for the day and next four days.
– NOSTRO.FWD.BAL
• Forward balance projection of Nostro account
– NOSTRO.FWD.BAL.DET
• Details of Cash flow on Nostro Account
Nostro Position gives the current and forward positions of the accounts by currency.
This ENQUIRY is called NOSTRO.POSITION.

MM Reports
• RG.MM0001: Maturity List
• RG.MM0002: Payments List
• RG.MM0003: Contracts ‘Unconfirmed’ by broker
• RG.MM0004: Contracts ‘Unconfirmed’ by

Counterparty
• RG.MM0005: Deals related to Fiduciary deposits
• RG.MM0006: Missing payment instructions
RG.MM0001 : This report represents a maturity list of all MM contracts are to

mature within a defined period (As specified in LMM.INSTALL.CONDS)
RG.MM0002: This report lists all payments made (Swift MT202) related to MM
Deposit contracts (Interest and/or Principal + Interest) and settled within a defined
period from the day the report was produced
RG.MM0003: This report lists all MM contracts that await a deal confirmation from
the broker (if any)
RG.MM0004: This report lists all Money Market contracts executed, and that await
receipt of a deal confirmation from the counterparty
RG.MM0005: This report lists all deals related to Fiduciary contracts
RG.MM0006: This report lists all deals that have missing payment instructions, and
thus could not settle, hence may result in Nostro position imbalances, along with the
corresponding risks involved.

System maintained tables
• LMM.ACCOUNT.BALANCES
Contains information relating to principal
movements, interest accruals,
commission accruals and funds
paid / received in the contract
Contains all financial information on LD and MM contracts:

Four types of info, relating to principal movements, interest accruals, commission
accruals, and funds paid/received in the contract
Movements on asset contracts are always shown as negative values except for
reductions in principal which are shown as positive.
Movements on liability contracts are always shown as positive values except for
reductions in principal which are shown as negative.
Each time interest is accrued on a contract, the LMM .ACCOUNT BALANCES fields
are updated (e.g. OUTS ACCRUED INT is debited on a placement contract) and an
entry is posted to Profit and Loss

LMM.SCHEDULES
Diary of future events for authorised contracts in LD and MM
The key is made up by contract no. event date(in Julian format
like 2001305 to indicate 305th day in the year 2001) and a suffix of
00.
At authorisation of a Loans or Money Market deal, LMM.SCHEDULES records are

written for each date that at least one schedule event is due to occur on the
contract. This field is the key to those LMM.SCHEDULES records. The composition
of the key is as follows:Contract number of e.g. MM/97255/00123 . Event date
(Julian) e.g. 1997349. Suffix always 00
Each contract can have many LMM.SCHEDULES records
Each record contains a list of the scheduled activities (principal draw downs,
principal or interest liquidation, sending payment instructions relating to a financial
movement, Rate Revisions)

• LMM.SCHEDULES.PAST
Events from
LMM.SCHEDULES after the
event date
Updated in Close of business
processing
Same Key as in
LMM.SCHEDULES

System maintained Tables
• LMM.HISTORY.LIST
– Maintains every contract history

MM Dependency diagram
CUSTOMER FT.COMMISSION.TYPE
CATEGORY BASIC.RATE.TEXT FT.CHARGE.TYPE
ACCOUNT BASIC.INTEREST
LMM.INSTALL.CONDS
CURRENCY INTEREST.BASIS
CUSTOMER.SSI PERIODIC.INTEREST
SEC.ACC.MASTER MM
CUSTOMER.CCY.ACCT
AGENCY
NOSTRO.ACCOUNT LMM.ADVICES LMM.ACCOUNT.BALANCES
ACCOUNT.CLASS LMM.ACTIVITY LMM.SCHEDULE.DATES
LIMIT LMM.TEXT LMM.SCHEDULES
COLLATERAL LMM.SCHEDULES.PAST
LMM.HISTORY.LIST

Summary
• We have so far seen
– the dependencies and linkages between MM module and T24

Core and other applications
– main business features of the Money Market module

MM Workshops and solutions – Handouts

Workshop - 1
• Input in the front office, a deposit of USD 100,000 for a period of

3 months at a fixed interest of 2%. Use your counterparty and
dealer desk created earlier. Do not authorise the transaction.
• The customer desires that the principal should be repaid to
another account with your bank. He also wants the interest to be
paid to his account with another bank. Make suitable changes in
the settlement details as back office input.
• Get the record authorised. Look at the accounting entries
created by using Enquiry TXN.ENTRY and STMT.ENTRY and
CONSOL.ENT.TODAY files.
• Look also at future dated STMT.ENTRY. Use ENQ NOSTRO.
FWD.BAL to look at forward balance position of your account

Workshop – 1 Solution



Workshop - 2
• Make a placement of USD 1 million with Allied Irish Bank

(Customer No. 100000) for 3 months.
• The placement is at a floating interest of Base rate minus 1.25
percent. Interest is to be paid in GBP
• Make the placement through your Broker
• Look at ENQ LIAB for the customer after authorisation
• Look at the delivery messages produced
• Look at the accounting entries for brokerage paid.




Workshop - 3
• For the Money market dealer desk you are using, and for USD
currency, look at the enquiries
– PM.CAS for the cash flow and
– PM.GAP for the break-even rate upto which 3 month deposits

could be raised to square the position.


Workshop - 4

placement limits of 1 million USD in Workshop – 3 of Introduction
session, input the following loans
– Call loan of USD 300,000 with a floating interest rate with a spread of
0.5 per cent. Defer the interest.
– 10 day notice loan of USD 300,000 with a fixed interest rate of 4
percent. Liquidate the interest but capitalise.
– For both the loans give a interest payment frequency of twice a month
(TWMTH).
• Look at the impact on time banded limit record
• Try to look at the Forward Stmt.Entry for both transactions as you have
deferred interest in one case and capitalised interest in the other.
• Look at system maintained LMM.SCHEDULES for the next interest
event
• Look at Enquiry PM.GAP and through Enquiry PM.INT observe the
effect due to change in interest rates by –1, +0.5 and +0.75





Workshop - 5

placement limits of 1 million USD, input the following loan
– Term loan of USD 250,000 for 4 months with a floating interest
rate with a spread of -0.5 per cent.
– Observe the override and authorise the transaction. See the
effect on time banded limits.
• Set the loan for auto rollover at the end of four month period for
every month. Fix the final maturity as 12 months. The interest is
also to be automatically capitalised.
• Collect LOAN charges from your customer’s GBP account.
Authorise the record with these changes.



Workshop - 6
• Accept a deposit of USD 25,000 from your customer for 12

months with an initial interest rate of -3% by allowing negative
interest
• Set it to be automatically rolled over after every 2 months.
Interest to be picked from PERIODIC.INTEREST with a spread
of 0.5%
• Look at the forward STMT.ENTRYs
• Look at the Enquiries MM.UNCONF.BROKER and
MM.UNCONF.CPARTY.
• Mark a broker deal as One sided



Workshop - 7
• Input a sundry loan for your customer for USD 5,000.
• Input minimum details and after committing, look at the System

defaulted fields


Workshop - 8
• Pick out the contract opened in Workshop - 1.
• Extend maturity by 3 more months.
• Reduce Principal by 50,000 and increase interest rate to 3% with

effect from the rollover date
• After authorisation, see the changes in the Interest and the Prin
Amount


Workshop - 9
• Early mature the deal opened in Workshop –5.
• Maturity date is 10th of next month.
• Collect EARLYMATMM charges.
• After authorisation, see the change in the Tot Interest Amt field
• View the scheduled events of the contract using Enquiry

MM.ETD


Workshop - 10
• Through MM.PAYMENT.ENTRY, look at some of the automatic
payments that have happened in Money market


Workshop - 11
• For your customer, input a deposit of USD 25,000 for 4 months

at a fixed interest rate of 5%. Mark the liquidation accounts as
internal account meant for Money market merger.
• Input another deposit of USD 25,000 at a floating interest rate.

Set this for an automatic roll over every month at the end of 4
months and upto one year.
• Authorise the contracts.
• Now, merge the first contract with the second contract


Workshop - 12
• Use Enquiry PM.IRE to view the resulting P&L if the interest rate
were to move down by 1%. Use CAS selection for your dealer
desk for USD
• Use Enquiry NOSTRO.POSITION to view actual balances of
current and the next four days of USD
• Drill down to Enquiry NOSTRO.FWD.BAL to view the value
dated balances
• Use Enquiry NOSTRO.FWD.BAL.DET to view complete details
of cash flow of USD in the Nostro account drilled down in the
previous enquiry
• Use Enquiry PM.DPAL to view the discounted unrealised profit /
loss flow for your dealer desk. Use CAS





T3TMM-T24 Money Market

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MONEY MARKET

TEMENOS EDUCATION CENTRE

Copyright 2006 TEMENOS HEADQUARTERS SA 1

Treasury – MM (T3TMM – R6) 1

Call / Notice Fixed period

Principal Interest Principal Interest

Fixed Floating Rollover Fixed

Copyright 2006 TEMENOS HEADQUARTERS SA 2

Treasury – MM (T3TMM – R6) 2

• All Business applications will make use of the following T24

Copyright 2006 TEMENOS HEADQUARTERS SA 3

Treasury – MM (T3TMM – R6) 3

Copyright 2006 TEMENOS HEADQUARTERS SA 4

Treasury – MM (T3TMM – R6) 4

Possible to set a negative interest rate for MM

Copyright 2006 TEMENOS HEADQUARTERS SA 5

Treasury – MM (T3TMM – R6) 5

Bid rate for Deposits

Offer rate to be greater

In MM, Used for

Copyright 2006 TEMENOS HEADQUARTERS SA 6

Treasury – MM (T3TMM – R6) 6

Copyright 2006 TEMENOS HEADQUARTERS SA 7

Charges and commissions other than for accounts are defined in

Treasury – MM (T3TMM – R6) 7

1. CUSTOMER.SSI SPVCN Order can be changed

INTERNAL SUSPENSE ACCOUNT

Copyright 2006 TEMENOS HEADQUARTERS SA 8

Treasury – MM (T3TMM – R6) 8

Copyright 2006 TEMENOS HEADQUARTERS SA 9

Treasury – MM (T3TMM – R6) 9

• Different Interest day basis for calculation of interest possible

Copyright 2006 TEMENOS HEADQUARTERS SA 10

Treasury – MM (T3TMM – R6) 10

Copyright 2006 TEMENOS HEADQUARTERS SA 11

Treasury – MM (T3TMM – R6) 11

• The Parameter tables to be set-up during implementation are

Copyright 2006 TEMENOS HEADQUARTERS SA 12

Treasury – MM (T3TMM – R6) 12

• Common parameter table for LD and MM.

Copyright 2006 TEMENOS HEADQUARTERS SA 13

Main parameter table that is common for LD and MM modules.

Treasury – MM (T3TMM – R6) 13

• Other important fields

Copyright 2006 TEMENOS HEADQUARTERS SA 14

For money market contracts, when a rollover is scheduled, a rollover advice is

Treasury – MM (T3TMM – R6) 14

• The various events in the life cycle of a MM contract are hard

Copyright 2006 TEMENOS HEADQUARTERS SA 15

Treasury – MM (T3TMM – R6) 15

• Other ways in which this table can be put to use are :

– Fair value interest rate can be picked from Periodic.Interest

– Option to mature Money market deals at Start of day by

Copyright 2006 TEMENOS HEADQUARTERS SA 16

Treasury – MM (T3TMM – R6) 16

• When settlement instructions of counter party are not known, the

proceeds are kept in internal suspense accounts. The advice

text printed on confirmations are specified in LMM.TEXT. The id

of the record is the Category code mentioned in

ACCOUNT.CLASS for SUSPLMMCR and SUSPLMMDR.

Copyright 2006 TEMENOS HEADQUARTERS SA 17

LMM.TEXT : table of advice texts which are printed on confirmations when

Treasury – MM (T3TMM – R6) 17