To use period close rules, you first set up the
Accounting Period Rule option at the entity level to indicate whether the entity generally uses an accounting date based on
:
Trade Date. Default.
Trade Date + 1 Business Day. Also called T+1.
The approach you select applies to processing for transactions across all accounting bases for that entity. As a result, a particular transaction has consistent accounting date treatment across all accounting bases within the same entity. When the system assigns an accounting date, the system ensures that all other accounting processing that follows these transactions follows the same logic as the trade (for example, income, ledger, margin, cash activity, and so on). This maintains consistency from start to finish in terms of the accounting date on transactions and the subsequent activity that they generate.
When the system processes an event, it determines whether the entity uses the Trade Date or T+1 approach. If the entity uses the Trade Date approach, the system uses the Trade Date approach to assign the accounting date. If the entity uses the T + 1 approach, the system
additionally confirms whether the period close rules
indicate that the event is eligible for T + 1 processing
before it assigns the accounting date. If the
period close rules included the event, the system uses the Trade Date + 1 Business Day approach to assign the accounting date. If the period close rules exclude the event, the system uses the trade date (effective date) as the accounting date.
When an event uses replication for entities with multiple accounting bases, it follows the event from the controlling basis, if one exists, or otherwise from the primary basis.
About
Period Close Rules for Event Types
Period close rules identify
the specific types of processing activity that are eligible for T + 1 when the system assigns accounting dates for entities that use the T + 1 approach
.
Each period close rule identifies an Eagle Accounting processing event for a Message Type/Event Type combination. You can
edit period close rules for event types with message types
of MTADJUST, MTOPEN, MTCLOSE, and MTLINK. Not every Event Type for those Message Types uses period close rules. For example,
period close rules are not available for CONVERSION events. Also, period close rules do not apply to MTCASH events.
When
you edit a period close rule, you can include or exclude processing events such as BUY or SELL from T + 1 accounting date assignment. Period close rules are not specific to an entity or accounting basis. The specific types of processing activities you include or exclude from T + 1 accounting date assignment apply to all entities that elect the T + 1 approach.
About Trade Panels Fields Related to the Accounting Date
Most trade panels include several fields related to period close rules and accounting date assignment.
Accounting Period Rule (tag 5566). This hidden field
identifies the Accounting Period Rule value assigned to the entity associated with the trade. A value of 1
indicates that the entity uses the Trade Date approach. A value of
2 indicates that the entity uses the T + 1 approach.
Accounting Date (tag 36)
. Specifies the trade's accounting date. The system uses the entity's accounting period rule to confirm whether the entity follows the Trade Date approach or the T + 1 approach. If the entity uses the T + 1 approach, the system checks the period close rules to verify whether the trade's processing event (for example, BUY, SELL) also follows the T + 1 approach. If the period close rules include the processing event, the system assigns the accounting date based on T + 1. Otherwise, if the period close rules exclude the processing event, the system assigns the accounting date based on Trade Date.
Next Day Indicator (tag 18000). This hidden field displays a value equal to the trade date of the T +
1 transaction based on period close logic. A date value indicates that the entity has an Accounting Period Rule set to Trade Date + 1 Business Day and the period close rules include the processing event for the trade, such that the trade uses the T + 1 approach for assigning the accounting date. The system uses this value to determine whether to consider trades as next day trades in cases where the trade date and post date are the same but the accounting date is greater than the trade and post dates.
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WRITERS NOTE: what Next Day Indicator value actually appears? What does it mean? How is it used? do we need to document the other 3 new fields? how many new fields actually appear on the trade? use 18000? |
About Accounting Dates for Earnings
In Eagle Accounting, trades can result in activity, such as income accruals, that is linked to the originating event
but relies on its own logic in terms of setting the accounting date, especially during rollback and replay.
Current day (trade date) trades trigger the rollback and replay of income activity that already occurred on the same effective (earn thru) date as the trade date. In cases where the entity uses the T + 1 approach to assign the accounting date, the system prevents the rollback and replay of earnings on trade date for T + 1 trades. It also ensures that earnings rows that would normally be created with an effective date equal to trade date are created when you run earnings the following business day.
About Accounting Dates for Variation Margin
In Eagle Accounting, trades can result in activity, such as variation margin processing, that is linked to the originating event
but relies on its own logic in terms of setting the accounting date, especially during rollback and replay.
The system prevents accounting date-related issues with variation margin when the entity uses the T + 1 approach. Unlike the global earnings process which uses the transaction accounting period, the global variation margin process uses the latest open valuation period. The system allows you to keep your valuation periods open while your accounting periods have been closed (Trans Close versus Val Close). If you book margin-related transactions after Trans Close, the system prevents that trade from being included in the current day's margin, and also updates the correct effective date once valuation periods are closed, to keep all accounting in line. Variation margin processing also accommodates securities such as cleared swaps that potentially require both income and margin processing when those securities may not be earned through the same date.
Report on Period Close Rules
You can use the Trade Activity report to report on trades that use period close rules. The system includes tags
18000 and 18002 in the Trade Activity report results
:
Next Day Indicator (tag 18000) Displays a value equal to the trade date of the T +
1 transaction based on period close logic. A value indicates that the entity uses the T + 1 approach and the period close rules additionally include the processing event for the trade, such that the trade uses the T + 1 approach for assigning the accounting date. The system uses this value for earnings processing to determine whether to consider trades as next day trades in cases where the trade date and post date are the same but the accounting date is greater than the trade and post dates.
Next Day Indicator Margin (tag 18002). Displays a value equal to the trade date of the T +
1 transaction based on period close logic. Indicates that the entity uses the T + 1 approach and the period close rules additionally include the processing event for the trade, such that the trade uses the T + 1 approach for assigning the accounting date.
The system uses this value for variation margin processing associated with T + 1 trades to determine when a next day (accounting date) trade is occurring.