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Before you can process transactions that use cash segregation, you must set up Eagle's Accounting solution for use with cash segregation.
In This Article

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• Entities, accounting bases, and composites
• Custodian bank codes
• Cash accounts
• ■      Entity Entity bank relationships
• ■      Cash Cash account relationships■      Securities
• Securities
• ■      TransactionsTransactions
• ■      Segregated Segregated positions
• ■      Cash Cash balances stored in the ESTAR database and STAR to PACE Direct
• ■      Transferring Transferring segregated quantity and cash between custodians of cash accounts
• ■      Reports Reports that track cash segregation information

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If you use cash segregation, Eagle's accounting solution offers two ways for you to manage accruals for cash balances. You can use either method  for the same cash account.  
Before you choose a methodology, consider which approach best meets your needs. Additional setup is required for both methods. ■      

• Interest on Cash Balances. Accrues interest on cash balances. It allows you to link an interest bearing asset (PST of CRINTC) to a cash account to accrue income and drop coupon payments on the cash balance. This method does not physically move the cash balance. The system creates a cash balance accrual position in the Cost object that has quantity but zero cost, and is not priced. The system processes accruals against the cash balance accrual position. See Set Up Cash Balance Accruals for more information.

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• Cash Account Level Cash Sweeps. Setup for cash sweeps occurs at the cash account level. Each individual cash account associated with an entity has the ability to sweep and can have different processing parameters. For each cash account you sweep, you define the sweep instrument along with the minimum balance to sweep. The cash sweep process then sweeps individual cash balances into custody level holdings where they accrue interest if the STIF instrument is an interest bearing asset. The system maintains principal and income balances throughout the cash sweep process. With this method, you sweep the segregated cash balance from a cash account into a sweep asset for a Money Market or other interest bearing account (PST of DBSTST or EQEQMF). See Manage Cash Sweeps for Cash Segregation for more information.

     Be aware that Eagle clients who do not use cash segregation can set up cash sweeps at the entity level to accrue interest on cash balances. Entity-level cash sweeps have no impact on the CUST basis. See the Fixed Income Processing User Guide for general information about cash sweeps.
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The system uses a transaction's custodian location and cash account to classify a transaction in the custody basis. Some transactions may not include this information. In addition, transactions generated by the Eagle Accounting system for corporate actions do not include this information. To allow the system to assign the cash account to transactions when it is not available, you create a set of rules that allow the system to assign missing data. The system uses entity bank relationships and cash account relationships to assign cash accounts to a transaction. Entity bank relationships allow you to associate multiple custody locations with a single entity. Cash account relationships allows you to associate an entity bank relationship with a custody cash account.
During transaction processing the system uses a hierarchy to make a best match for the cash account based on the transaction details. The system uses the custodian and custody bank account number provided with the transaction to identify the entity bank relationship in effect for the transaction. The entity bank relationship can apply to the transaction's entity or to the transaction's entity group or reporting composite. If the transaction does not identify the custodian, the system can use the entity bank relationship in effect for the transaction to identify the custodian. However, if the system identifies multiple entity bank relationships, it cannot determine which one to use.
The system then uses the cash account relationships defined for that entity bank relationship to determine the cash account. It uses the transaction's bank alias in combination with the cash account type, cash event type, security type, and long/short indicator to determine the appropriate cash account for the transaction. The bank alias, tag 16, is the instance number of the entity bank relationship that links the entity or entity group for the transaction to their assigned custodian bank code and custody bank account number.
The system tries to assign a missing cash account using the following matching steps. If it meets the criteria it applies the cash account; otherwise, it continues to the next step.
 

 
For example, say the system cannot identify a cash account relationship for the transaction's bank alias that exactly matches the transaction's values for cash account type (Default, Income, Margin, Reclaim, Trade), cash event type (Disbursement, Receipt), security type, and long/short indicator, so the first match step does not succeed. The system next tries to find a cash account relationship for the transaction's bank alias with an exact match on cash category, cash event type, and security type, and accepts a long/short indicator value of Default or not defined, denoted by X in the database. If that fails, it continues to the next match step.
If the system cannot use the entity bank relationships and cash account relationships to identify a missing cash account number, the transaction succeeds in other accounting bases but fails in the custody basis and goes to Automation Center for repair.

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