Transactions Created during Sweep Processing

When you run the sweep process, a buy transaction of the STIF vehicle is posted for debit cash balances, and a sell transaction of the STIF vehicle is posted for credit balances. In both cases, the transaction generated by the sweep process is automatically settled. The cash settlement of the transactions occurs in the asset currency of the STIF vehicle. Close transactions created during sweep processing use the FIFO lot selection method.

If you run the cash sweep process on an account more than once in a day, Eagle Accounting takes the appropriate action based upon the cash position at the time of the sweep. For example, if there is a debit cash balance, Eagle Accounting creates a purchase of the STIF security. If there is a credit balance, Eagle Accounting creates a sell of the STIF security (provided there is a position in that security). You see multiple sweep transactions for the account on that particular day.

Eagle Accounting only sweeps settled cash. Any pending settlement transactions are not included in the sweep process. By default, Purchase and Sale of STIF securities are executed at a Price of 1.00. Or, you can have the cash sweep process identify sweep assets flagged as floating and price them at a value other than 1. If there is no cash balance to sweep on an eligible account, no transaction is processed.

During cash sweep processing performed at the cash account level, used with cash segregation, the system also creates sweep open and close transactions. It creates holdings for the new sweep asset on all accounting bases for the entity based on what was linked to the cash account you are sweeping. The sweep process also generates transactions at the CUST accounting basis level, as that is where it maintains the custody account breakout. The sweep asset generates cash held at same custody location where the cash is a balance account. The Custodial Cash Balance Indicator option, defined at the cash account relationship level, determines where the cash is a balance account.

Sweeping Negative Cash Balances

You can sweep negative cash balances from sweep assets so that the system covers cash shortfalls from the sweep balance. When a negative cash balance is present, and the cash sweep balance is insufficient to cover the balance, the cash sweep process sweeps the entire net amount and, with the latest price, derives the net amount.The transaction to cover a negative cash balance is a Close event. The close of a negative cash balance never takes the sweep asset short, it can only cover a cash balance up to the total cash available on the sweep asset.

When a negative cash balance exists, if the sweep asset has enough total cash to cover the shortfall, the system bases the P&I breakdown on the cash account proportions. Otherwise, when a negative cash balance exists, if the sweep asset does not have enough cash to cover the shortfall, the system bases the P&I breakdown on the sweep asset proportions.

Retaining Principal and Income Balances

During sweep Open transactions, the system retains principal and income balances so that the separate balances reflect the balances that would otherwise be available on the cash account. The systems stores the principal and income amounts, which correspond to the principal and income on the cash account, on the Cost position level as well as the open lot.

When you view the sweep transaction, you can see Principal Amount Local (tag 165) and Income Amount Local (tag 1985) values, associated with the cash balances for Principal Balance and Income Balance on the Cash position.

When you add additional lots via Close transactions, the system adjusts the principal and income on the position level. Principal and income carry to the Cash position and stay in sync with the Cash position at all times

Using a Price of 1 or Floating Pricing

You can process cash sweeps for a sweep asset priced at 1 or can use a floating price instrument.

Money market funds in the US are traditionally priced at $1 so the number of units traded exactly matches the cash amount of a transaction. These instruments are used in the sweep process. The underlying assumption is that the trades are processed at $1. Therefore, the sweep process assumes that the purchase/sale price of the sweep instrument is $1.00. By default, the price is 1 to ensure that the currency sweep amount and the number of units of the instrument are always the same.

Prime institutional Money Market instruments can have a floating NAV, so the number of units may not match the cash amount of the trade. You can have the cash sweep process identify sweep assets flagged as floating and price them at a value other than 1.

The cash sweep process starts with the amount of overage or underfunding of the cash account but can also calculate the number of sweep instrument units to be purchased or sold to bring the cash balance to zero. In order to perform the calculation of units for floating price instruments. the process retrieves the ending price from the Price table and uses this value in the calculation.

If the sweep asset identifies a dedicated price source, the cash sweep process determines the price based on the effective date of the transaction. The cash sweep process determines the units of the transaction, based on (net amount / price). Otherwise, if the sweep asset is not identified as a floating price instrument and prices are present, the cash sweep process still uses a default rate of 1.00.

To identify a floating price instrument and its pricing source for use in cash sweep processing, you use the Floating Pricing Instrument option and the Floating Price Source option . See “Setting Up the STIF SMF Record” for more informationwhen you set up the security.

Defining Minimum Balances for Cash Sweeps

You can assign a minimum balance needed in order for the system to process a cash sweep transaction. You can assign a minimum balance if you want to prevent the system from processing a cash sweep if only a small balance is available for sweeping.When you assign a minimum balance, the system compares the minimum balance amount specified for the entity or cash account to the actual cash balance for the entity or cash account during the cash sweep process as it determines whether to perform a cash sweep.You can use the Minimum Balance option to define a minimum balance for an entity or cash account. If you process cash sweeps at the:

• Entity level to sweep cash from the current base currency cash balance into a STIF, you can assign a minimum balance to the entity or master fund that is eligible for cash sweeps. See “Setting Up an Entity for Cash Sweeps” for more information.

• Cash accounting level to sweep cash from a cash account into a money market or other interest bearing account (STIF or mutual fund security), and you use cash segregation, you can assign a minimum balance to the cash account this that is eligible for cash sweeps. See “Setting Up Cash Accounts for Cash Sweeps” for more information.

When you set up a minimum balance, you must specify a positive number. If you specify a value and the cash balance is positive, the system sweeps cash only if the balance is equal to or greater than the minimum balance. However, if you specify a minimum balance and the cash balance is negative, sweep processing always occurs to cover that negative balance.