Manage Amortization/Accretion Rules

Owned by Tom Fahey (Unlicensed)
Last updated: Oct 03, 2016 by Former user (Deleted)
2 min read

Amortization/accretion rules specify how the system amortizes the securities held by the entity. You can set up separate amortization rules at the following levels: accounting basis, processing security type, amortization/accretion rule type, security identifier, tax lot. You can also establish separate amortization rules for market premium and market discount premium at the accounting basis level, processing security type level, and/or the security ID level.

Add Amortization/Accretion Rules

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In the Add Amortization/Accretion Rules panel, you can add an amortization/accretion rule. Once you create an accounting rule, you can create the amortization/accretion rules that use the accounting rule. See the Manage Accounting Rules page.

When you create amortization/accretion rules to support International Financial Reporting Standards (IFRS), keep in mind that IFRS requires the use of an effective yield when calculating amortization for fixed income securities. The effective yield functionality for average cost portfolios is accomplished by applying a position level yield to lot level data and subsequently aggregating lot level amortization to obtain position level amortization. When you set up an average cost portfolio, you can apply effective yield amortization methods of Constant Yield 1 (CY1), Constant Yield 2 (CY2 with smoothing), Level Yield 1 (LY1), and Level Yield 2 (LY2 with smoothing).

To add an amortization/accretion rule:

  1. From any Eagle window, click the Eagle Navigator button to access the Eagle Navigator.
  2. Enter Add Amortization/Accretion Rules in the Start Search text box.
  3. Click the Add Amortization/Accretion Rules link to access the panel.
    You see the Add Amortization/Accretion Rules panel.
  4. Complete the options on the Add Amortization/Accretion Rules panel. See the Amortization/Accretion Rules Panel Options page.
  5. Click Submit.
  6. Close the Add Amortization/Accretion Rules bottom tab.

Change Amortization/Accretion Rules

In the Change Amortization/Accretion Rules panel, you can change an amortization/accretion rule. If you change the amortization rule on an accounting basis level, or make a change to a field in an existing amortization rule that does not create a new instance of the rule, the system will true up the position retrospectively from the original settlement date. 

To change an amortization/accretion rule:

  1. From any Eagle window, click the Eagle Navigator button to access the Eagle Navigator.
  2. Enter Change Amortization/Accretion Rules in the Start Search text box.
  3. Click the Change Amortization/Accretion Rules link to access the panel.
    You see the Change Amortization/Accretion Rules panel.
  4. Complete the fields on the Change Amortization/Accretion Rules panel and click Submit.
    You see the amortization/accretion rules that met your criteria in the Show All tab.
  5. Select each amortization/accretion rule you want to change and click Change Selected Amortization/Accretion Rules.
    You see each rule you selected in the Change Selected Amortization/Accretion Rules tab.
  6. Modify the amortization/accretion rule and click Submit.
    The Change Amortization/Accretion Rules panel allows you to change the value of the Rule End Date field.
    All other fields are locked, and you cannot make changes. The reason for this is that the system only recalculates a yield based on reference data changes, and/or amortization rule instance changes, or on the coupon date of the security. By forcing you to change or delete an amortization rule if the rule was set up incorrectly, the system always recalculates the yield when changes are made.
  7. Close the Change Amortization/Accretion Rules bottom tab.