2. Processing Brokerage (2024)

2.1 Introduction

A Broker is a party who mediates between a buyer and a seller. TheBrokerage paid to a broker is a fee for acting as intermediary betweenbuyer and seller. There are many types of brokerages added in areas suchas Money Market, For Ex, Securities, etc.

Brokerage will usually be based on either a percentage of the transactionor a flat fee. They can also be a combination of the two. Oracle FLEXCUBEsupports Trade Finance activities, Securities, Derivatives, For Ex Dealsetc. where Brokerage is involved.

This manual explains the processing of brokerage in Oracle FLEXCUBE.Using the Brokerage service that Oracle FLEXCUBE provides, you can:

• Capture and maintain the details of brokers - assign a broker code,and record the name and address of the broker
• Specify brokerage discounts for a broker
• Specify the currency of booking
• Specify whether brokerage is to be paid on the deal in advance orin arrears
• Define a brokerage rule with amount slabs for specifying a flat amount,a percentage of the deal or the deal amount, within certain limits
• Specify whether the brokerage amount should be in the deal currencyor converted to the LCY
• Book brokerage to an internal account - by debiting the expense andcrediting the brokerage payable account (brokerage is booked on initiationof the deal).
• Opt to liquidate brokerage either automatically or manually at dealinitiation or liquidation. (You can manually liquidate the consolidatedbrokerage payable to a broker involved in many deals. That is, a brokermay be entitled to brokerage from more than one deal. You can liquidatethe brokerage payable for all these deals, once and for all, using themanual liquidation function).
• Associate a broker with a brokerage rule and a product so that thebrokerage is applicable to all the deals involving the product
• Make deal - specific changes
• Generate reports on the brokerage payable and the brokerage thathas been already paid

You process brokerage in Oracle FLEXCUBE in the following manner:

• Maintain broker details
• Maintain brokerage rules
• Associate a broker and product with a brokerage rule

Associating a broker and a product with a rule is explainedin the Products Manual.

• Process brokerage on a contract

This chapter contains the following sections:

• Section 2.2, "Broker Details"
• Section 2.3, "Brokerage Rule Definition"
• Section 2.4, "Broker Association"
• Section 2.5, "Brokerage on a Contract"
• Section 2.6, "Brokerage Discount Maintenance"
• Section 2.7, "Brokerage Liquidation"
• Section 2.8, "Brokerage Association Report"

2.2 Broker Details

This section contains the following topic:

• Section 2.2.1, "Capturing Broker Details"

2.2.1 Capturing Broker Details

You can capture the basic details of brokers with whom your bank dealswith in the ‘Broker Master Maintenance’ screen. In this screen,you can specify the following:

• The broker’s code
• The name and address of the broker
• The booking currency
• The transaction code under which the system should track accountingentries involving the liquidation
• Whether it is to be paid in advance or as arrears
• The tax scheme applicable
• The tax paid and the tax payable accounts

You can invoke the ‘Broker Master Maintenance’ screenby typing ‘BRDMAST’ in the field at the top right cornerof the Application tool bar and clicking the adjoining arrow button.

BrokerIdentification

In the ‘Broker Master Maintenance’ screen, you shouldspecify a (unique) Broker Identification for every broker with whom youdeal. The Broker Identification has to be the same as the broker’sCustomer Identification Number (since a broker will have an account withyou − that is, will be a customer of your bank). The Customer IdentificationNumber can be selected from a list that is displayed.

This Broker ID will be used to identify the broker. For example, whenprocessing a deal on which you have to pay brokerage, or when generatingreports for a broker, you need to enter the code of the broker involved.

Broker’s Address

When you select a Customer Identification Number to identify a broker,the system maps and displays the name and address of the broker .Youcannot change the name which displays in this screen, but according tothe defined details you can enter the changed address of the broker.

The fields to be entered are as follows:

• Name
• Street
• City
• Country

Liquidation Transaction Code

A broker gets the brokerage amount only after liquidation throughthe brokerage liquidation function. You should specify a liquidationtransaction code from the codes maintained in the Core Entities moduleof Oracle FLEXCUBE. The system passes accounting entries under the selectedtransaction code.

Tax Scheme

A tax scheme holds the tax rules for the tax applicable on the brokeragepaid.

Payable Currency

The brokerage is booked into the Broker Account defined in this screen.If this account is either not specified or is not available when brokerageis being booked, the brokerage will be booked in any one of the broker’ssavings or current accounts (in the currency specified here).

For every broker, you can specify the currency in which you wouldlike to pay brokerage. If the currency that you specify is not the broker’saccount currency, the standard exchange rate (for the day) will be usedto convert the brokerage into the currency of the broker’s account.

Booking

You can opt to book the brokerage payable to a broker either in:

• Advance
• Arrears

If you select:

• Advance: brokerage will be booked when the deal is initiated
• Arrears: brokerage will be booked when the deal is liquidated

Category

This defines the category of the entity whether a broker, an Exchangemember or a Clearing member

• Broker
• Exchange
• Clearing Member

Applicable For

Check or uncheck the box ‘Exchange Trade Derivatives’accordingly.

If the flag is checked then it means that the broker defined is availablefor the Exchange trade derivative module.

Tax Paid

If any tax is to be paid on the brokerage, you have to specify thefollowing details:

• Account – The account from which the broker’stax component debits
• Transaction code −You have to specify the transaction code for the tax payable accountby selecting one from the list so that the system passes accounting entriesfor this transaction. The transaction code identifies the nature of theentry which passes.
• If any tax is payable on the brokerage, you have to specifythe following details:
• Account − Theaccount to which the broker’s tax component credits
• Transaction code – You have to specify the transactioncode for the tax payable account so that the system passes accountingentries for this transaction.

Under the ‘Broker Account’ table you can specify the following.

Account

Specify the account of the broker. The adjoining option list givesyou a list of accounts. Choose the appropriate one. You cannot specifythe same account number for another broker. Each broker should have accountnumbers unique to him.

Note

It is mandatory for you to specify at least one accountnumber for the broker. If the broker is dealing with Exchange TradedDerivatives, his external accounts have to be maintained here. You cannotspecify the same account numbers for different brokers. Each broker shouldhave unique account numbers.

Description

Enter a brief description for the account.

2.3 Brokerage Rule Definition

This section contains the following topics:

• Section 2.3.1, "Invoking ICCF Rule Availability Maintenance"
• Section 2.3.2, "Building a Brokerage Rule"
• Section 2.3.3, "Calculating Brokerage using aTenor-Based Tier/Slab Structure"
• Section 2.3.4, "The Sequence in Which ICCF Rulesare Resolved"
• Section 2.3.5, "Copying an ICCF Rule"

2.3.1 Invoking ICCF Rule Availability Maintenance

A brokerage rule identifies the basic nature of a brokerage component.Each brokerage rule is defined by a ten-character code, called the RuleID. Attributes are defined for this Rule ID, which is then associatedwith a broker and product. When a deal is processed, the brokerage attributesdefined for the Rule ID that is associated with a broker and productwill be applied on the deal.

A brokerage rule is created in the same way that any Interest, Commission,Charge and Fee (ICCF) rule is created, as follows:

• The rule is created at the head office branch, by giving ita unique identification and description, in the ICCF Rule AvailabilityMaintenance screen. In this screen, the rule is made available for usein the required branches by maintaining an allowed / disallowed listof branches.
• At the required branch, in the ICCF Rule Maintenance Screen,the attributes for the rule are defined. Maintaining the attributes inthis screen is subject to whether maintenance of ICCF rules is allowedfor the branch, and also whether the rule for which attributes are beingdefined, is allowed for the branch.

To recall, at the head office of your branch, you can create appropriateICCF rules and make the rules available to the required branches.

In the ‘ICCF Rule Availability Maintenance’ screen, youcan maintain ICCF rules, which you can make available to desired branches.You can do this by maintaining a list of branches for which the use ofthe rule is allowed, or disallowed. You can invoke this screen by typing‘CFDICCFR’ in the field at the top right cornerof the Application tool bar and clicking the adjoining arrow button.

In this screen, youmust specify the following information:

Rule Identification and Description

You must specify a unique identification for the ICCF rule you arecreating. If you are creating a brokerage rule, specify a unique identificationfor the brokerage rule. This is the identification that will be usedas to identify for the rule, in all subsequent references to it. Youmust also specify a unique description for the rule.

Every brokerage rule is identified by a unique ten-character code,called a Rule ID. You can link a valid Brokerage Rule ID to the appropriatebroker and product. When a deal is processed, the brokerage attributesdefined for the Rule ID that is associated with a broker and productwill be applied on the deal.

Note

After the rule has been created in the ICCF RuleAvailability Maintenance screen, the at­tributes for the rule mustbe defined in the ICCF Rule Maintenance Screen.

Branch Restrictions

You can maintain a list of allowed branches (that is, the rule willbe available for use in the allowed list of branches) or disallowed branches(the rule will not be available for use in the branches in the disallowedlist).

To recall, the attributes for the rule are defined, in the ICCF RuleMaintenance Screen. Maintaining the attributes in this screen, for abranch, is subject to whether maintenance of ICCF rules is allowed forthe branch, and also whether the rule for which attributes are beingdefined, is allowed for the branch.

For details about the Common Branch Restrictions, refer theSecurity Management System user manual.

2.3.2 Building a Brokerage Rule

After a brokerage rule has been created in the ‘ICCF Rule BranchAvailability Maintenance’ screen, the attributes of the brokeragerule are defined in the ‘ICCF Rule Maintenance’ screen. Youcan invoke this screen by typing ‘CFDRUMNE’ in the field at the top right cornerof the Application tool bar and clicking on the adjoining arrow button.While indicating the rule type in this screen, choose Brokerage fromthe option list.

If youare defining a brokerage type of component, you need to specify the followingdetails through the ICCF Rule Maintenance Screen.

Rule Type

Specify whether the Rule type for calculating brokerage is AggregationType or Individual Type.

• Aggregation type indicates that brokerage is calculated onthe total value of the deals
• Individual Type indicates that brokerage is calculatedon a deal-by -deal basis

Rule Identification

Enter the ID of the rule for which you are defining attributes. Everybrokerage rule is identified by a unique ten-character code, called aRule ID. You can link a valid Brokerage Rule ID to the appropriate brokerand product. When a deal is processed, the brokerage attributes definedfor the Rule ID that is associated with a broker and product will beapplied on the deal.

To recall, the Rule ID for a brokerage rule is specified in the ICCFRule Branch Availability maintenance. Accordingly, in the Rule ID fieldin this screen, you must select the ID of the brokerage rule that youwish to build by maintaining the attributes.

The option list in the Rule ID field is populated based on the followingconditions:

• Only those Rule IDs that are available for users at the currentbranch according to the ICCF Rule Branch Availability maintenance aredisplayed
• The maintenance of ICCF rules must be allowed for users atthe current branch, according to the restrictions maintained in the CommonBranch Restrictions maintenance for the restriction type ICCFRULE.

If no Common Branch Restrictions have been maintained, and the restrictiontype ICCF RULE has not been maintained in the SMS Branch RestrictionType maintenance, the option list in the Rule ID field only displaysthose rules that are available for users in the current branch, accordingto the ICCF Rule Branch Availability maintenance.

Description

Enter a description for the brokerage rule. This description willbe associated with the brokerage rule for information retrieval purposes.

Transaction Currency

If you wish to define the attributes for all currencies, you can selectthe ALL option in the Currency Code field to indicate this. If you aremaintaining the attributes for the selected ICCF rule in specific currencyother than the ALL, select the Transaction Currency on which the rulemapping maintenance is to be made applicable.

Customer Group

Select the customer group on which the rule mapping maintenance isto be made applicable. You can create a generalized brokerage rule mappingrecord by selecting the ALL option in the Customer Group field. Thisspecification is defaulted to the Customer and Customer Account fields.You are forbid to change the specification.

Customer

Specify the Customer ID of the customer for whom you are maintainingthe rule mapping.

Branch Code

If you are maintaining the attributes for the selected ICCF rule fromthe head office branch, you can select the branch for which the attributesare being defined. If you wish to define the attributes for all branches,you can select the ALL option in the Branch Code field to indicate this.

If you are maintaining the attributes for the selected ICCF rule froma branch other than the head office, you can only select those branchesthat are found in the allowed list of branches for:

• the ICCF rule definition Restriction Type (ICCFRULE), in theCommon Branch Restrictions maintenance for the current branch
• the selected rule being built, according to the ICCFRule Availability maintenance

In other words, the option list in the Branch Code field would displayonly those branches that are allowed both for the rule and the currentbranch.

Defining the brokerage rule application factors

You can apply a brokerage rule on any contract, irrespective of thecurrency of the contract, the customer and the branch involved.

In the ICCF Rule Details screen, rules to be applicable for contractsinvolving all branches, transaction currencies, customers and customercategories must be maintained at the head office branch. Subsequently,you can maintain the specific rules to be applicable for contracts involvingfor the following combinations:

• A specific branch, customer category, customer and currency
• A specific branch, customer category, customer and all currencies
• A specific branch, customer category, currency and all customers
• A specific branch, currency and all customer categories andcustomers
• A specific branch, customer categories and all currencies andcustomers
• A specific branch and all customer categories, customers andcurrencies
• A specific customer category, customer, currency, and all branches
• A specific customer category, customer and all currencies andbranches
• A specific customer category, currency and all customers andbranches
• A specific currency and all customer categories, customersand branches
• A specific customer category and all customers, currenciesand branches
• All branches, customer categories, customers and currencies

Note

As mentioned earlier, the rules applicable for combinationsinvolving all branches (the ALL option in the Branch Code field) canbe maintained only from the head office branch.

Once an ICCF Rule has been defined, you should associate it with abroker and product through the Brokerage Association screen. Dependingon the broker and product involved in a contract, the appropriate rulewill be made applicable.

Rate Type

The Rate Type indicates whether the Brokerage to be applied for theRule ID is a flat amount or a percentage of the basis amount.

Select the rate type from the following:

• Flat amount – You can specify a fixed amountas brokerage. This will be the brokerage amount for all contracts involvingthe brokerage rule you are defining.
• Fixed rate - You can specify a percentage as brokerage.The rate that you specify will be applied on the contract amountto calculate the brokerage amount.

The specific rates and amounts applicable have to be specified subsequentlythrough this screen.

Rounding

When rule type is brokerage no need to give value in this field.

Amount Limits for a Brokerage Calculation

If you indicated that brokerage should be calculated as a flat amount,you can specify the amount range (minimum and maximum amounts) withinwhich the amount calculated using the brokerage rate should fall.

Rate Limits for a Brokerage for Brokerage Calculation

If you have chosen not to maintain the minimum and maximum amounts,you can specify the minimum and maximum rates for brokerage calculations.If the brokerage calculated using this Rule ID exceeds the amount calculatedusing the maximum rate specified here, the maximum rate amount will beapplied as brokerage. Similarly, if the brokerage amount falls belowthe amount calculated using the minimum rate, the minimum rate amountwill be considered as brokerage.

Note

If you have specified a flat amount as the Rule Type,then you need not specify the mini­mum and maximum amount/rate limits.

Tenor basis

You should specify whether the Rule ID you are defining is to be appliedbased on the tenor of the contract. The tenor of the contract is calculatedas the difference between the Maturity Date and the Value Date of thecontract. After the tenor is calculated, brokerage will be computed basedon the tenor slabs defined in the ‘Tenor Based Rates’ sectionof the screen. The following sections will explain how brokerage is calculatedusing a tenor based structure.

Interest Basis

This specifies the calculation basis for the brokerage based on theContract Currency or Rule Currency. Check this box if you wish to calculatethe brokerage based on the contract currency. If you wish to calculatethe brokerage based on the rule currency, then you have to choose thebrokerage calculation value from dropdown list next to this field.

Tiered Amount

You can define the brokerage to be applied on contracts in any oneof the following ways:

• In a tier structure (cumulative)
• In a slab structure (non-cumulative)

You should first indicate whether the Basis Amount that you specifysubsequently should be considered as a Slab or a Tier. Check the ‘TieredAmount’ option if you wish to maintain the Basis Amount structureas Tiers. Leave it blank if you are maintaining a slab structure.

The Basis Amount is the upper limit of the slab or tier to which aparticular rate or amount should be applied as brokerage.

As per Contract Currency

This specifies whether the brokerage is paid in the charge currencyor in the currency of the contract.

Tiered Tenor

Tiered tenor is applicable only for duration based (explained later)brokerage. You can indicate that brokerage is to be calculated on thebasis of a tiered tenor structure, by choosing the Tiered Tenor option.

Rate

Code

For a contract, you can calculate brokerage in a currency other thanthe contract currency. The rate code specified here will be used to computeexchange rates between the currency pair involved in the contract.

Specify whether the currency rate for deal or slab currency from thefollowing:

• Mid
• Buy
• Sell

Booking Currency

You should indicate the currency in which the brokerage amount isto be calculated:

• Charge Ccy - If you specify the brokerage currency as chargecurrency, brokerage will be calculated in the currency selected in the‘Charge Currency’ field. For a contract in foreign currency,the contract amount is converted into the charge currency equivalentbefore brokerage is applied.
• Contract Ccy - If you specify the brokerage currency as thecontract currency, brokerage will be calculated in the currencyof the contract

Bracket Tenor

You can create a Brokerage Rule which calculates brokerage chargeson the basis of an amount structure. In this table you define the differentattributes of amount structure based on which the brokerage charges wouldbe calculated.

Basis Amount To

You should specify the upper limit of the slab or tier to which aparticular rate or amount should be applied as brokerage. The brokeragerate or amount (depending on the rate type) is to be specified in thesubsequent field.

Fixed Rate

If the brokerage is in the form of a percentage of the contract amount,you should specify the applicable rate. This rate will be applied forthe Basis Amount To, depending on whether you have defined the applicationbasis as a slab or a tier.

Charge Unit

The Charge Unit specifies the unit for rounding up a brokerage basisamount to the nearest amount. The brokerage will be calculated on therounded basis amount.

Flat Amount

If the brokerage is in the form of a flat amount, the amount shouldbe specified. This amount will be applied for the Basis Amount To, dependingon whether you have defined the application basis as a slab or a tier.

Floor Basis Amount

You should specify this only if the amount basis is a Tier. This willbe the upper limit of the previous tier limit. By default, the amountspecified as the Basis Amount To for the previous tier limit will bedisplayed. For the first limit in the tier do not specify this.

This amount is used to calculate the brokerage, along with the FloorCCF Amount that is to be specified next.

Floor CCF Amount

You should specify this only if the Rule Type is a Commission.

This amount need not be the same as the amount calculated using theBasis Amount and rate for the previous slab.

Tenor Based Rates

Tenor From and Tenor To

You can define a tenor-based tier or slab structure for every amountslab that you have built.

The Tenor From refers to the start of the tenor period and the TenorTo refers to the end of the period. The rate or flat amount will be specifiedsubsequently.

Note

Note that the Tenor From and Tenor To is definedin days.

Fixed rate

If the brokerage is to be calculated as a percentage, you should specifythe applicable rate against each tenor. This rate will be applied onthe transaction amount, based on the amount slab and on whether the applicationbasis defined for the tenor based structure is a slab or a tier.

Flat Amount

To levy a flat charge, specify the flat amount. This amount will beapplied on the Basis Amount, depending on whether you have defined theapplication basis as a slab or a tier.

2.3.3 Calculating Brokerage using a Tenor-Based Tier/SlabStructure

Calculation of brokerage using a Tenor-Based Tier/Slab Structure isexplained with an example

Let us assume that you have defined a brokerage rule, to be associatedwith contracts based on the following tenor basis:

Let us see how the brokerage is calculated for the following contract:

Contract Amount = USD 800,000

Tenor = 250 days (assuming that the difference between the maturitydate and value date is 250 days)

Brokerage for non-cumulative amount and tenor structure:

The contract amount is USD 800,000, which falls under the second amountslab. The contract duration is 250 days, which falls under the thirdtenor defined for this amount slab.

Therefore, brokerage= 800,000 * 0.3% = 2400.

Brokerage for a tiered amount and non-tiered tenorcombination:

For this combination, the contract amount will be distributed amongstthe various slabs and depending on the tenor, the rate correspondingto the tenor will be used to calculate the brokerage.

Brokerage for the first 100,000 (1st amount slab) is calculated asfollows:

The contract tenor is 250 days, which falls in the 3rd tenor.

Therefore, brokerage = 100,000 * 0.17% = USD 170

Brokerage on the remaining 700,000 = 700,000 * 0.3% = USD 2100

The total brokerage = (170+2100) = 2270

Specifying a Duration Based Brokerage

At the time of defining a brokerage rule, you can also specify whetherthe brokerage amount should be calculated based on the duration of thecontract. In effect, you indicate whether the duration of the contractis a component in the formula for calculating the brokerage amount.

The formula used will be (Rate %* Contract Amount*Duration of thecontract)

The duration of the contract will be calculated based on the Interestbasis that you specify. You can either choose to apply the interest basisassociated with the contract currency or opt for a different Interestbasis from the drop-down list. Interest basis is defaulted from the CurrencyDefinition table if you select the ‘As per contract ccy’option.

2.3.4 The Sequence in Which ICCF Rules are Resolved

ICCF Rules that you maintain are resolved in the following sequence:

2.3.5 Copying an ICCF Rule

In order to make the definition of ICCF rules easier, you can copyan existing rule and modify its attributes.

2.4 Broker Association

This section contains the following topics:

• Section 2.4.1, "Associating a Broker and product witha Rule"

2.4.1 Associating a Broker and product with a Rule

Brokerage association enables you to link a product, a rule, a currencyor a currency pair (in the case of foreign exchange products) and a broker.

Further, you can make a Brokerage Rule applicable for a broker, productand currency combination.

For a Foreign Exchange deal, you can make the brokerage applicableonly when the contract involves a specific currency pair.

Invoke the ‘Brokerage Association Maintenance’ screenby typing ‘BRDASSOC’ in the field at the top right cornerof the Application tool bar and clicking the adjoining arrow button.

Featuresof the screen

You have to give the following inputs in the Broker Association screento define an association:

• Broker Code (or Broker ID): Enter the broker code,or select a Broker Code from the option list by clicking on the optionlist available
• Product Code: Select a Product Code fromthe option list
• Currency: If the rule you are defining is forMM contracts in a specific currency, enter the S.W.I.F.T. Code of thecurrency in this field. If the rule being defined is for Foreign Exchangecontracts, you can make it applicable for contracts involving a specificcurrency pair by entering the pair at Currency1and Currency2. SWIFT code here means the ISOcode for currency as specified in SWIFT standards.

The attributes of the brokerage rule will be associated with contractsdefined in this combination.

Rule Code: Select a Rule Code from the option list. Thisrule associates with the Broker + Product and currency or currency paircombination.

Note

While processing security deals you can choose toadd the brokerage computed at the deal level to the cost of the asset,instead of being expensed while processing the SE deal.

2.5 Brokerage on a Contract

This section contains the following topics:

• Section 2.5.1, "Brokerage Details Maintenance"

2.5.1 Brokerage Details Maintenance

When capturing the details of a contract, you will have to specifythe brokerage details applicable to the contract. By default, the brokeragedetails specified for the product apply to the contract as well. However,if you want to change some details, like the booking of brokerage —whether the brokerage should be booked in advance, in arrears, or waivedaltogether − or the currency of the contract, you will have toinvoke the ‘Brokerage Details’ screen.

You can invoke this screen through the Contract Details screen byclicking ‘Brokerage’ button in the screen.

In case of a newcontract, if brokerage already exists for the product, to which the contractis associated, the system will pick up the values and display them inthis screen. However, if the product has not been associated with a brokeragerule, you will not see any values in this screen.

You can define brokerage for a specific contract, even if it has notbeen defined for the other contracts involving the product.

When you invoke the Contract Brokerage Details screen, you can changethe values only if you have clicked the Modify option from the ActionMenu.

You have to give the following inputs in the Brokerage Details screento define the contract brokerage details:

Reference Number

This is a display field which displays the corresponding contractreference number.

Broker Code

This displays the broker code selected in the contracts main screen

Broker Name

This displays the description of the broker code.

The broker code displays along with the broker’s name in thescreen. You cannot change the broker, through this screen, for the contractthat you are processing.

Payable

If the brokerage Payable Currency is the same as thebrokerage Paid Currency, then the same amounts (brokeragepaid and brokerage payable) displays against the currencies. You canchange these currencies if you wish to. While you cannot alter the brokeragepayable amount which displays, you can change the ‘brokerage paidamount’ value.

• Currency: This is the currency which books the brokerage amountspecified in the Broker Master screen
• Amount: This displays the brokerage amount calculatedfor the transaction

Liquidation

This designates the status of the brokerage, whether the brokerageis liquidated or is still outstanding for the contract. If it is liquidated,it displays the liquidation reference number.

• Status: This represents the status of the brokerage amount .whetherit is Outstanding/Liquidated
• Reference number: If the brokerage Amount pertainingto that contract is liquidated then the liquidation reference no thatis generated for brokerage wil be displayed here.

Rule

This indicates the brokerage rule code and description on the basisof which brokerage is calculated.

• Code
• Description

Brokerage

• Currency: This indicates the currency in which brokerage ispaid. Select a currency code from the option list
• Amount: This field displays the amount payable to thebroker .You cannot change this amount

Booking

This indicates when the brokerage applicable to the transaction isbooked. The preference that you specify for the broker becomes default.You have the option to change the default , that is ,from advance toarrears or from arrears to advance. To waive brokerage for the transaction,choose the 'No Booking' option.

The options available are as follows:

• No Booking
• Advance
• Arrears

Consider for Discount

This option is defaulted from the deal product level. However, checkboxis unchecked if the booking method is other than ‘Advance’.

2.6 Brokerage Discount Maintenance

This section contains the following topics:

• Section 2.6.1, "Maintaining Brokerage Discounts"

2.6.1 Maintaining Brokerage Discounts

A stockbroker who carries out buy and sell orders at a reduced commissioncompared to a full-service broker, but provides no investment adviceis called as a Discount Broker.

It used to be that only the wealthy could afford a broker and accessto the stock market. The internet has brought an explosion of discountbrokers which let you trade at a smaller brokerage. However, it is importantto remember that discount brokers don't provide personalized advice.Because of discount brokers, nearly anybody can afford to invest in themarket.

We can maintain discount for a Broker through the ‘BrokerageDiscount Maintenance’ screen. You can invoke this screen by typing‘BRDDISCO’ in the field at the top right cornerof the Application tool bar and clicking the adjoining arrow button.Amount Slabs can be maintained in this screen where a discount will bedone on the brokerage amount that is due for the broker.

2.7 Brokerage Liquidation

This section contains the following topics:

• Section 2.7.1, "Liquidating Brokerage Manually"
• Section 2.7.2, "Accounting Entries Button"

2.7.1 Liquidating Brokerage Manually

You can liquidate brokerage payable on a contract through the ‘BrokerageLiquidation Input’ screen. You can invoke this screen by typing‘BRDLIQD’ in the field at the top right cornerof the Application tool bar and clicking the adjoining arrow button.In this screen, you can opt to liquidate the consolidated brokerage (duefrom more than one contract) that is due to a broker.

BrokerCode

Select the broker code for which brokerage is liquidated fromthe option list. To manually pay brokerage for various contracts,involving a specific broker, you have to specify the Broker Code of theindividual concerned.

Value Date

Contracts whose value date is same as that is mentioned here willbe queried.

Currency

Select from the option list, the currency in which the brokerage hasto be paid to the broker.

Module

Choose the module for which the brokerage is being calculated. Ifyou wish to calculate brokerage for all the modules, choose the ‘ALL’option. The date on which the brokerage is booked will also be displayedin this screen. Brokerage is calculated for the following modules:

• BC
• DV
• FX
• LD
• MM
• OT
• SD
• ID
• MC

Liquidation Reference Number

Each broker code associates a Liquidation reference number.The Liquidation Ref No is automatically generated by the system. Thisnumber is based on the event code (not on the product code) and is usedto generate the transaction reference number for the liquidation. Theparticular broker code you have specified displays this number in thisscreen.

Tax Scheme

The tax scheme you have defined for the broker displays in this field.The tax scheme applicable on the brokerage would be the scheme specifiedin the Broker Master Detail screen.

Total Amount Payable

Select the check box against each Contract Reference number to populatethe Total Amount Payable field in the screen. As and when you selecta contract, the brokerage amount applicable to the contract gets addedto the amount displayed in the Total Amount Payable field.

Brokerage Discount

This displays the discount amount if any discounting is attached atthe broker level.

Remarks

You can enter some information about the broker confirmation whichis internal to the bank. This is not printed on any correspondence withthe counterparty.

Query

Click ‘Query’ button to see all the contracts for whichbrokerage is yet to be paid, after the required inputs are given.

Recalculate

On clicking ‘Query’ button, the system will fetch allcontracts and by default the Select check box will be selected and thetotal amount payable will display the consolidated amount. If only afew contracts need to be liquidated then we can uncheck those contractsand recalculate the total amount field.

Transaction Details

The contract details displays in the Transaction Details section ofthe screen.

• Contract Reference
• Booking Account
• Amount Payable
• Value Date
• Status

Tax

You can invoke the ‘Tax Details’ screen by clicking ‘Tax’button in the ‘Brokerage Liquidation Input’ screen. In thisscreen you will see the tax details applicable on the contract.

Settlements

You can invoke the ‘Settlement Details’ screen by clicking‘Settlement’ button in the ‘Brokerage Liquidation Input’screen.

Events

You can invoke the ‘Event Details’ screen by clicking‘Events’ button in the ‘Brokerage Liquidation Input’screen to view the events associated with brokerage liquidation.

Advices

If any brokerage advices are present, they can be viewed from the‘Contract Advices’ screen. Click ‘Advices’ buttonin the ‘Brokerage Liquidation Input’ screen.

2.7.2 Accounting Entries Button

The brokerage that is calculated on a contract is parked in a suspenseaccount before it is paid to the broker. This account would be an internalaccount of the bank. It is specified at the time of defining the accountingroles and event-wise accounting entries for the product (which involvesthe contract on which brokerage is to be calculated). Accounting entriesfor brokerage liquidation are defined at the time of product definition,both, for booking, or, initiation and liquidation.

The brokerage payable account (the broker’s account into whichthe actual brokerage for a particular deal is to be paid) is definedin the brokerage liquidation screen in the Settlements module.

Although a broker may have to be paid brokerage on several deals,the manual liquidation function of the system consolidates these intoa single settlement amount to be passed to the settlement account. Thebrokerage payment advice specified at the time of defining advices fora product will be triggered.

If you click ‘Accounting Entries’ button on the ‘Events’screen invoked from the contract main screen, you will see the accountingentries screen for the particular Liquidation reference number. The eventis ‘Liquidation’ and the transaction date is today’sdate.

Youwill see the following in the ‘Accounting Entries’ screen:

• Value date
• Branch
• Account no
• Ccy
• Dr/Cr
• Transaction code
• FCY amount
• Exchange rate for FCY
• LCY amount

2.8 Brokerage Association Report

This section contains the following topics:

• Section 2.8.1, "Generating Brokerage AssociationReport"
• Section 2.8.2, "Contents of the Report"

2.8.1 Generating Brokerage Association Report

This report gives details of all associated brokers. It is printeddaily as part of the batch process. You can configure this report todisplay details of brokerage contract. You can generate the report basedon the following criteria:

• The From and the To record which includes broker and productcode, currencies involved in transactions

You can invoke this screen by typing ‘BRRASSOC’ in the field at the top right cornerof the Application tool bar and clicking on the adjoining arrow button.

Specify the followingdetails:

Broker Code

Specify the broker code from which you want to generate the report.

Product Code

Specify the product code for which you want to generate the report.

Currency 1

Specify the first currency from which you want to generate the report.

Currency 2

Specify the second currency from which you want to generate the report.

Broker Code

Specify the broker code until which you want to generate the report.

Product Code

Specify the product code until which you want to generate the report.

Currency 1

Specify the first currency to which you want to generate the report.

Currency 2

Specify the second currency to which you want to generate the report.

Once you have specified the details, click ‘OK’ buttonto generate the report.

2.8.2 Contents of the Report

The contents of the ‘Brokerage Association Report’ arediscussed under the following heads:

Header of the Report

The Header carries the title of the Report, information on the branchcode, the branch date, the user ID, the module name, the date and timeat which the report was generated and the page number of the report.

Body of the Report

The details of the borrower that would be displayed in the reportare as follows: