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Overview
A time deposit is a simple investment that most commonly accrues a fixed interest rate payable at maturity. Global nomenclature for time deposits includes Certificates of Deposit (CDs), Guaranteed Investment Certificates and Term Deposits. Time Deposits tend to pay slightly higher interest rates compared to savings accounts, and the common model is to prohibit or discourage withdrawal prior to maturity date by imposing early withdrawal fees. Eagle does not offer specific processing for Time Deposits, but Eagle’s core fixed income functionality can easily be leveraged to handle these simple investments.
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Reference Data
Eagle recommends modeling Time Deposits as bonds, which are single security master records. You can select one of two processing security types. If the Time Deposit is considered short-term, DBIBST should be used. If the Time Deposit is considered long-term, DBIBFD should be used. Selecting either processing security type will yield the same cash results, as the earnings process calculates yields, accruals, and amortization in the exact same manner. The main difference in terms of accounting is tax treatment. The two Processing Security Types will also yield different groupings on some reports.
- Payment Frequency = At Maturity
- Issue Price = 100
- 1st Coupon Date = Maturity Date
- Last Coupon Date = Maturity Date
- Maturity Price = 100
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Entity Setup
There are no specific settings for entities trading Time Deposits modeled as bonds. As most time deposits are purchased at par and therefore accrue only interest, no special amortization rules are required. Should the Time Deposit be purchased at a price other than par, Eagle’s core fixed income accounting will amortize the security to par at maturity if the entity utilizes an amortization rule other than NONE.
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Trade Processing
Buy
Once the security reference and entity data is setup, trades can be entered using the Book Trade panel under the Trade tab. Trades will follow core accounting processes. Required fields are listed below.
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- Set Maturity Processing Date equal to Maturity Date of the Time Deposit security
- To settle the principal and interest cash at maturity, use Global > Settlements > Contract Cash
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Accounting
Once a Time Deposit position has been established it will follow all core Eagle Accounting processes.
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- Market value = Par Value * Clean Unit Price * Price Multiplier * Quantity Scale)
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Reporting
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STAR to PACE (S2P)
Almost all reports in Eagle Accounting leverage data from Data Management, which is populated by the S2P process
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. This will be scheduled as part of the daily workflow, but can also be triggered manually as described in the Accounting section.
The S2P process creates a single row for each Time Deposit
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- The market_value_income column on the Time Deposit security row will capture the market value plus any accrued interest payable
- Cash activity will be appropriately signed
Similar to other instruments, STAR to PACE creates data in position, position_detail, trade, and cash_activity tables.
OPERATIONAL REPORTING
Time Deposits will appear on all core Eagle reports. The operational reports were specifically designed to support daily workflow. They are used to quickly identify differences and provide the necessary level of detail in order to resolve any discrepancies that may exist. The reports are primarily driven off of Data Management with data updated by the STAR to PACE Direct events. Eagle recommends following current best practices of using these core queries and building custom result profiles that fit your business needs.
INVESTMENT REPORTING
The STAR to PACE process moves position, cash activity, and trade data to Data Management. This enables users to take advantage of all of the Data Management OLAP reporting capabilities:
- Single/multi period lot, aggregate, and position reporting
- Trade activity reporting
- Cash activity reporting
- Exposure reporting with full analytics integration
Certain data has to be augmented to accounting data to achieve complete exposure reporting.
PERFORMANCE
in the
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POSITION, POSITION_DETAIL, TRADE, and CASH_ACTIVITY tables. The MARKET_VALUE_INCOME column captures the total market value, inclusive of price fluctuations and period-to-date accruals payable or receivable.
Accounting Reports
Eagle has a core set of accounting reports that can be used to review Time Deposit information. These are designed to support the daily operational workflow for business users, allowing Grid Reports to be easily exported to Excel and customized to provide additional details as needed. Advanced Reports are intended to be client-facing and do not provide the same level of customization.
Data Management Reporting
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Performance
The performance toolkit has full functionality to calculate market value-based performance for Time Deposits
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using data supplied by the
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S2P process. Risk and performance attribution
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features are available to analyze
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Fixed-to-Float Bond performance.
Automation
Eagle supports loading Time Deposit SMFs and trades through standard Message Center streams. The SMF must be loaded prior to the trade (trades will not automatically spawn SMF records). Refer to the Generic Streams and Data Uploaders Reference Guide to Supported Generic Interfaces V17 for more information.