Convert Positions for ECL for IFRS

In the Conversion of Position to Eagle STAR panel, you can add expected credit losses (ECL) to the conversion event for debt security positions. This allows you to establish the appropriate expected credit loss balance for new Eagle client conversions with appropriate accounting entries. To add expected credit losses to the conversion event when you use IFRS, the position must be Long and the accounting basis for the positions must have an ECL Method of Non-US Treatment with regulatory categories of FVOCI/AC.

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1 Conversion of Position to Eagle STAR Panel Options for Expected Credit Loss
2 Panel Example for IFRS - FVOCI/AC

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Conversion/Buy/Receive Transactions ECL Scenarios for IFRS

To convert a position for expected credit losses when you use IFRS:

In Accounting Center, in the left navigation pane, click Transactions > Trades > Book Trade/Rebook Trade > Book Trade.
You see the Book Trade workspace.
In the Search Details pane, select your search criteria.
In the results grid, click a security.
Do one of the following to select the transaction activity:
- On the Book Trade tab, in the Actions group, click Action Rules, point to the transaction type of Other, and then click Conversion.
- Right-click the security row, point to Other, and then click Conversion.
You see the Conversion of Position to Eagle STAR panel.
Enter the entity, issue, and trade information for the position.
Enter the Conversion Information Local options that apply to conversion transactions that reflect asset-level Expected Credit Losses for fixed income positions that are Long. For a position with Non-US Treatment (IFRS basis), you can:
- Specify the Purchased Impaired value.
- Specify the Expected Credit Loss Local value.
- Specify the Expected Credit Loss Stage value.
If the security has a foreign denomination, in the Conversion Information Base section, you can specify the Expected Credit Loss Base value.
Complete the remaining information in the transaction entry panel.
On the Form tab, in the Validation group, click Validate and validate the transaction data.
Click Submit to submit the transaction for processing.

Conversion of Position to Eagle STAR Panel Options for Expected Credit Loss

For conversion transactions on IFRS accounting bases, the Eagle accounting rules and posting matrix post ECL ledger entries as follows: For Amortized Cost (AC) and Fair Value Other Comprehensive Income (FV-OCI) portfolios, the system debits Cost of Investments with offset to Conversion Cost. For AC portfolios, the system credits contra-asset account for Allowance for ECL and debit accumulated undistributed income. For FV-OCI portfolios, the system credits capital account for ECL Allowance and debits Accumulated Undistributed Income.

The Conversion of Position to Eagle STAR panel includes the following fields specific to fixed income positions associated with Expected Credit Loss. Note that options may vary according to your selections.

Option	Tag	Description
Conversion Information Local
Purchased Impaired	16999	Indicates whether the position is credit impaired. This field appears only for long fixed income positions that have an ECL Method field value of either Non-US Treatment with regulatory categories of FVOCI/AC or US Treatment with regulatory categories of AFS/HTM. Options include: No. Default. The position is not credit impaired. Yes. The position is credit impaired.
Expected Credit Loss Local	16990	Specifies the value of the local Expected Credit Loss allowance. If you specify a value, you must additionally specify a value for the Regulatory Intent field or the Expected Credit Loss Stage field. This field appears only for long fixed income positions that have an ECL Method field value of US Treatment with regulatory categories of AFS/HTM.
Regulatory Intent	2921	Indicates the regulatory intent for positions that have a regulatory category of AFS (Available for Sale). This field appears only for long fixed income positions that have an ECL Method field value of US Treatment with a regulatory category of AFS. Options include: Intent to Sell. If you select this value, you cannot specify a value for the Expected Credit Loss Local field. Likely Required to Sell. If you select this value, you cannot specify a value for the Expected Credit Loss Local field. Not Likely Required to Sell. Default. This value appears if you enter a value for the Expected Credit Loss Local field.
Expected Credit Loss Stage	7100	Identifies the Expected Credit Loss stage. The stage tracks the credit quality status of financial instruments. You must specify a value if you enter a value for the Expected Credit Loss Local field or if you set the Purchased Impaired option to Yes. This field appears only for long fixed income positions that have an ECL Method field value of Non-US Treatment with regulatory categories of FVOCI/AC. Options include: Stage 1. Have not deteriorated significantly in credit quality or have low credit risk. Stage 2. Deteriorated significantly in credit quality since initial recognition (unless low credit risk at reporting date) and not having objective evidence of impairment. Stage 3. The system assigns this value if you set Purchased Impaired to Yes.
Conversion Information Base
Expected Credit Loss Base	16991	Specifies the value of the base Expected Credit Loss allowance. This value can differ from the Expected Credit Loss Local value for ECL transactions where the security is foreign denominated. You can specify a value only for ECL transactions where the security is foreign denominated.

Panel Example for IFRS - FVOCI/AC

A sample panel follows for the ECL method of Non-US Treatment, for IFRS accounting basis with an FVOCI ((Fair Value - Other Comprehensive Income)) or AC (Amortized Cost) regulatory category.