Book a Forward Transaction without a Forward Security Master Record
The Forward Security Exists field on the Create/Edit Entity panel and Create Master Fund panel determines whether you must add the forward to the security master file prior to booking the forward transaction. If this field is set to No, you can book the forward using the Book Trade workspace. The system creates two security master records, one for each leg of the forward, when you book the trade.
To book a Forward transaction without a forward security master record:
In Accounting Center, in the left navigation pane, click Transactions > Trades > Book Trade/Rebook Trade > Book Trade.
You see the Book Trade workspace.Complete the options in the Search Details pane and click Search.
For example, select Primary Asset Identifier. Then, enter the Primary Asset Identifier for the currency for one side of the forward transaction. You must also enter the Entity ID/Entity Name and the Trade Date and Settle Date field values. You see the securities that meet the search criteria.
Do one of the following:
- On the Book Trade tab, in the Actions group, click Action Rules, point to Book Foreign Exchange.
- Right-click the cash security for which you are booking a forward transaction, and click Book Foreign Exchange, .
For example, right-click the USD cash security. You see a shortcut menu with a set of options that determine the actions you can perform for the security. If you select the Book Foreign Exchange option, you see additional options that allow you to buy or sell the USD currency using the forward transaction,Select an option, such as:
- Buy Currency - Forward Contract
- Sell Currency - Forward Contract
You see the Forward currency exchange trade panel.Complete the fields on the trade panel.
For example, suppose you selected Buy Currency – Forward Contract. In addition to entering the entity and security identifier, you must enter a value for the following:
– Sell Currency Symbol. Specifies the offsetting sell currency code.
– Sell Quantity. Specifies the amount to be sold.
– Buy Quantity. Specifies the amount to be bought.
The forward's issue name is a concatenation of Currency 1 + Currency 2 + Investment Type + Maturity Date + Broker Code, as follows:
– GBP/USD FWD 20170114
– USD/GBP FWD 20170114
For a forward, the Settlement Date can be referred to as the Maturity Date.
In the Transaction Fee Information section, you can enter commissions and other fees in the following fields. The commission and/or other fees create a traded cash record separate from the traded cash on close forward transactions. The commission or fee uses the Settlement Currency field (tag 63) as the commission or fee settlement currency, as follows:
– CommAmt L. Specifies the amount of the trade commission in the local currency.
– Other Fee Local. Specifies any additional fees on the transaction in the local currency.
– Fee Settlement Date. Specifies the fee settlement date associated with the commission and fee amount.
Additionally, you must specify a broker code. Be aware of the entity's setting for the Forward Position By Broker field to ensure you enter the proper value. This field indicates whether to use the broker code to distinguish forwards made with a different broker, but with the same two currencies and maturity date.
Click Submit.
View Results of the Forward Transaction in Issue Viewer
You can view the results of a forward transaction using Reference Data Center or the Issue Viewer tool. The example below in Issue Viewer shows a separate security for each leg of the forward.
You can also view the results of the forward transaction using the Position Viewer tool. In the example below, the Open Lots tab in the Cost object shows a record for each leg of the forward. One leg of the forward shows the sale of 100.000.00 GPB. Notice the negative sign for the Quantity and the Net Local Amount fields.
The other leg shows the buy of the USD.
The Cash Journal report shows the traded cash activity to both currencies.
When the forward settles, the position for both legs of the forward are brought to zero, leaving positive and negative cash amounts for the currencies that were processed as part of the forward.
Add a Forward Security Master Record
The Forward Security Exists field on the Create/Edit Entity panel and Create Master Fund panel determines whether you must add the forward to the security master file prior to booking the forward transaction. If this field is set to Yes, you must add the security master record prior to booking the forward transaction. You can use Reference Data Center to add the forward security master record. Or you can use Issue Viewer to add the forward security master record.
Book a Forward Transaction with a Forward Security Master Record
To manually book an open trade for a forward transaction with a forward Security Master record:
In Accounting Center, in the left navigation pane, click Transactions > Trades > Book Trade/Rebook Trade > Book Trade.
You see the Book Trade workspace.Complete the options in the Search Details pane and click Search.
Search for the forward security as you would for any other type of security. You see the search results based on the criteria you selected.
NOTE: The query returned both legs of the previously set up forward contract. You can select either leg to complete the trade because. In this example, the security master CAD was set up as the Sell Currency and USD was set up as the Buy Currency.Right-click the security row, click Book Foreign Exchange, and then click Sell Currency – Forward Contract.
You see the Forward Contract panel.Complete the options on the Forward Contract panel.
Once you select the security, you only need to enter the Sell Quantity and Buy Quantity since the Currency Codes were set up when you created the security master record for the forward contract.Click Submit to process the transaction.
View Results of the Forward Transaction in Position Viewer
Once the transaction is completed, the Position Viewer tool displays the forward transaction the same way as when the Forward Security Exists field is set to No.
