Once a security master file has been created and is held by an entity, the Pledge Master and Pledge Reason must be configured before pledging units (detailed under Pledge Processing).

The Pledge Type (7001) field in the Create/Edit Pledge Master (V17) | Add/Change Pledge Master (pre-V17) screen uses a Code Value lookup on the PLEDGE TYPE Code Category (both Name and Description). This comes prepopulated with the options listed below. You should add any additional options that are needed.

• Hard Segregation = HS

• Letter of Credit = LC

• Loan = LN

• Restricted Shares = RS

• Trust = TR

There is functionality to track pledging activity at the counterparty level. If a Counter Party (7002) is selected, it will be stored as part of the Pledge Master when the record is added or updated. The process creates a unique Pledge Master ID (14) on each Pledge Master record by concatenating Pledge ID (1233), Pledge Type Code (82), and Counter Party Code (1413). The Counter Party (7002) field also uses a Code Value lookup. The Code Category Name is COUNTER-PARTY and Code Category Description is COUNTERPARTY FOR PLACEMENTS AND BORROWINGS. It does not come prepopulated. You will need to add the appropriate counterparties if you plan to track pledging activity at the counterparty level.

Entity Setup

Entities pledging securities do not require any special setup.

Reference Data

In order to pledge a security, a security master file must be setup (via Reference Data Center, Issue Viewer, or Security Reference Manager) and owned by an entity. A quantity cannot be pledged greater than the entity’s existing position balance.

Pledge Processing

Step 1: open Create/Edit Pledge Master (V17) | Add/Change Pledge Master (pre-V17)

• Pledge ID (1233) and Pledge Name (961): populate with unique descriptors that will be used to identify the pledge

• Pledge Type (7001): select from available options; Pledge Types are maintained using Code Values (the Code Category Name and Description are PLEDGE TYPE)

• Pledge Amount (1485): optional, for reference purposes only; the actual amount of a pledge is defined during Process [Run] Restriction Activity

• Margin Tolerance (1487): can be any value; required, but not necessary for pledge processing

• Pledge Date (1495): select initial date of the pledge

• Release Date (1496): optional, for reference purposes only; the actual release date is defined during Process [Run] Restriction Activity when Transaction Method = Release

• Counter Party (7002): select from available options

Step 2: open Create Pledge Reason (V17) | Add Pledge Reason (pre-V17) to create a new one, or Edit Pledge Reason (V17) | Change Pledge Reason (pre-V17) to modify an existing one

Status Account feeds Reason Account in Step 3.

• Status Account Name (1290): populate with description of pledge purpose

• Status Account Number (1288): populate with unique account number (must be 7999999999 - 9499999999)

Step 3: open Run Restriction Activity (V17) | Process Restriction Activity (pre-V17) to pledge a security, transfer a pledge to a different Reason Account, or release a pledge

Before processing any activity, ensure STAR to PACE (S2P) has been run for effective date of the activity and current day.

• Select Query Option (2283)

  • One Entity/One Security: returns pledged and unpledged positions for the security in a single entity/composite

  • All Entities/One Security: returns all pledged and unpledged positions for the security across all entities/composites that hold it

• Entity/Composite ID (1163) and Name (1164): populate with ID and Name of entity/composite holding the security (required only when querying One Entity/One Security)

  • For databases with multiple partitions, all entities linked to the composite being queried should be on the same partition

• Effective Date (7560): select date of pledge, transfer, or release

• Issue Name (961) and Cross Reference ID (1233): populate with Name and ID of security being pledged, transferred, or released

• Transaction Method (3821): select Pledge, Release, or Transfer

• Pledge ID (1141): populate with ID from Pledge Master

• Restriction Reason Account (1624): populate with name of Reason Account

• Counter Party (1413): retrieved from Pledge Master

• Custody Bank Name (1146): the custody bank will be retrieved automatically when the entity/composite is queried based on the entity/bank relationship that has previously been established

• Partition Number (95): required if database is divided into multiple partitions and querying by All Entities/One Security

Step 4: this screen returns all positions based on elections from Step 3

• Click Process Restriction Activity

Step 5: this screen pulls positions into a multi-row panel to pledge, transfer, or release

• Pledge: each row will display the Position Units Currently Held, Units Currently Restricted, and Units Available

  • Restricted Quantity: amount to be pledged

    • Automatically populates with Units Available, but can be overwritten

  • Restricted Quantity is multiplied by Market Price to calculate a Market Value

  • Click Submit to process a pledge restriction across one or many entities

• Transfer: each row will display the Position Units Currently Held and Units Currently Restricted

  • Restricted Quantity: amount of pledge to be transferred to different Reason Account

    • Cannot be greater than Units Currently Restricted

  • Restricted Quantity is multiplied by Market Price to calculate a Market Value

  • Transfer Pledge Reason Account: enter name of Reason Account to which the pledge is being transferred

  • Click Submit to transfer pledge to a different Reason Account across one or many entities

• Release: each row will display the Position Units Currently Held and Units Currently Restricted

  • Restricted Quantity: amount of pledge to be released

  • Restricted Quantity is multiplied by Market Price to calculate a Market Value

  • Click Submit to release pledge restriction across one or many entities

Accounting

Once a pledge is processed, the entity will be unable to close the restricted quantity.

Valuation

Pledged securities can and should continue to be marked to market in accordance with your legal accounting requirements.

Reporting

STAR to PACE (S2P)

In V10.0 and above, pledge restriction information is also stored in Data Management. Restricted quantities of each position are stored in HOLDINGDBO.CUSTODY_BALANCE. Restriction related activity is stored in HOLDINGDBO.CUSTODY_ACTIVITY.

Because pledge restrictions are driven off of Data Management, each entity/composite must have its holdings populated in the POSITION_DETAIL table on the date of a pledge, transfer, or release.

Accounting Reports

Eagle Accounting has a set of core reports that can be used to review pledge restriction information.

• Restricted Balances Report

• Custody Summary

• Custody Activity

• Custody Reconciliation

• Query Restriction Balances

• Query Restriction Activity

Data Management Reporting

General Reporting (Eagle OLAP)

With restriction information stored in Data Management, users can take advantage of Eagle’s OLAP reporting capabilities:

• Control Reporting: position report for one or all securities with pledges

• Entity Level Reporting: position report for specific entities showing all positions with pledged amounts and the applicable reason accounts

• Entity Level Reporting (without pledge detail): position report for specific entities showing all positions and no pledge information