3.1 Cross Currency Behaviour

This topic describes about the information on Cross Currency behavior of entities and transactions in OBELCM.

Oracle ELCM offers robust cross-currency functionality, enabling banks to create and manage entities such as collateral and credit facilities in different currencies. This means a facility might be set up in one currency, while the associated collateral or posted transactions (like utilization or blocks) can be in another. The system automatically handles currency conversions using applicable exchange rates, ensuring consistent amount tracking and accurate limit management regardless of currency differences. This capability provides flexibility for banks to support multi-currency business operations, better serve customers, and maintain comprehensive risk and compliance controls across portfolios.

Supported exchange rate combinations in OBELCM.

Table 3-1 Exchange Rate Combinations

Exchange Rate Combinations Source of Exchange Rate Applicability
Direct/Indirect rates – Branch Card Rates ‘Create Currency Exchange Rate’ Maintenance at branch All Entities
Fixed Exchange rate through transaction (Fixed rate) Utilization/Block Transactions All Entities
Amount through transaction which derives the rate (Fixed Amount) Utilization/Block Transactions All Entities
Rate Agreement Parameters (FX Rate) Rate Agreement Parameters settings at facility Facility
Use Head Office Exchange Rate ‘Create Currency Exchange Rate’ Maintenance of Head Office Branch (HO) All Entities
Through currency - currency setup ‘Create Currency Exchange Rate’ Maintenance All Entities

For specific OBELCM cross currency enhancements like Fixed Exchange rate through transaction (Fixed rate), Amount through transaction which derives the rate (Fixed Amount), Rate Agreement Parameters (FX Rate), and Use Head Office Exchange Rate – refer to section Specific Cross Currency Enhancements.

For each of the above combination, there are 3 essential parameters that controls the cross-currency processing, along with the Rate Types and exchange rates.

Table 3-2 Parameters

Parameters Parameter Value Description
Mode Online
  • This refers to the online activity like creation of an entity or posting of a transaction (utilization or block).
  • In online mode, cross currency transactions fetch the rate as available at that point of time.
Mode Batch
  • This refers to the revaluations of entities or transactions due to change in currency exchange rate during End of day processing.
  • Currency revaluation is always batch mode.
Branch Liability Branch (LIAB_BR)
  • Liability Branch refers to the branch where the liability associated with an entity (say facility) is created.
  • Liability and it’s entities can be created in separate branches.
  • When the parameter ‘obelcm.parameter.revalwithliabbrn’ is set to ‘Y’, system uses the exchange rate (for the currency pairs) maintained in Liability branch (LIAB_BR) for revaluation of cross currency transactions during End of Day (EOD).
Branch Transaction Branch (UTIL_BR)
  • This is the branch where transactions (utils or blocks) against an entity (say facility) originate.
  • All Online cross currency transactions use the exchange rate for the currency pairs maintained in this branch.
  • When the parameter ‘obelcm.parameter.revalwithliabbrn’ is set to ‘N’, system uses exchange rate of the Transaction Branch (UTIL_BR) to revaluate cross currency transactions during EOD.
  • Normally, banks set this when they use different rates for different branches.
Upward Propagation Enabled
  • In case of hierarchical setup of liability, facility, liability-facility the flag ‘obelcm.parameter.ccyPropagationEnabled’ controls if the exchange rate of child entity is to be applied up in the hierarchy.
  • When set to ‘Y’, the same exchange rate of child entity is applied up in the hierarchy.
Upward Propogation Disabled When the flag ‘obelcm.parameter.ccyPropagationEnabled’ is set to ‘N’, the exchange rate applied for the child entity is not propagated up in the hierarchy. Instead, rates as per card rates are considered.
Rate Rate Type This is the rate type for which you maintain the exchange rates for a currency pair. For different transaction categories your bank would like to maintain different exchange rates. For example, traveler’s cheque is purchased at a certain rate whereas a bill of exchange is bought at a different rate.
Exchange Rates

You have 3 exchange rates – Mid, Buy and Sell

Mid-rate is an indicative exchange rate for a currency pair. It is the average of the buy and sell rate quoted by the market for a currency pair. Buy and Sell Rate are the rate of exchange for a currency pair, which is computed by the system based upon spread on mid-rate.
Refer to the below use cases that depict the parameter usage – Mode and Branch.
  • Parameter ‘obelcm.parameter.revalwithliabbrn’ is set to ‘Y’

    Table 3-3 Use Case

    Use Case Branch Rate considered - Online Branch Rate considered - Revaluation
    Entity Maintenance – Entities created in different branches LIAB_BR rate LIAB_BR rate
    Entity and Transaction - Transactions are posted from different branches UTIL_BR rate LIAB_BR rate
For example,

Table 3-4 Use Cases

Entity and Transaction Branch Use Case Branch Exchange Rate to be considered - Online Branch Exchange Rate to be considered - Revaluation
  • Liability Branch = B01
  • Collateral Branch = B02
  • Facility Branch = B02
  • Transaction Branch = B03
 Entity Maintenance - Entities created in different branches LIAB_BR rate (B01) LIAB_BR rate (B01)
Entity and Transaction - Transactions are posted from different branches LIAB_BR rate (B03) LIAB_BR rate (B01)
Summary: When Parameter ‘obelcm.parameter.revalwithliabbrn’ is set to ‘Y’.
  • The revaluation of both maintenances and transactions will be processed based on the execution of EOD in Liability Branch (LIAB_BR).
  • New transaction will consider Utilization Branch (UTIL_BR) rate as part of online transaction. Increase utilization will consider Utilization Branch (UTIL_BR) rate as part of online transaction.
  • When an increase utilization is done, cumulative utilization amount on account considering increase as well as earlier transaction will be revalued considering Utilization Branch (UTIL_BR) rate.
  • As part of EOD, all utilizations will be revalued considering Liability Branch (LIAB_BR) rate.
  • Any maintenance always considers Liability Branch (LIAB_BR) rate (online as well revaluation as part of batch).
Below table shows the working of various Exchange Rate combinations and how they behave with the parameters - Example of utilization against facility.
  • Mode : Online and Batch (Revaluation)
  • Branch: obelcm.parameter.revalwithliabbrn = ‘Y’
  • Upward Propagation: obelcm.parameter.ccyPropagationEnabled = ‘Y’ or ‘N’

Table 3-5 Exchange Rate Combinations

Exchange Rate Combinations UPWARD_PROPAGATION Entities(Hierarchy) Rate considered - Online Rate considered – Revaluation (Batch) Remarks
Direct/Indirect rates – Branch Card Rates (Currency Exchange Rate’ Maintenance at branch) Y or N Liability UTIL_BR rate LIAB_BR rate
  • Transaction CCY different from entity.
  • All entities in hierarchy uses the branch card rates.

    • Online – Utilization branch card rates.

    • Revaluation – Liability branch card rates.
Mainline
Subline

Table 3-6 Exchange Rate Combinations

Exchange Rate Combinations UPWARD_PROPAGATION Entities(Hierarchy) Rate considered - Online Rate considered – Revaluation (Batch) Remarks
Fixed Exchange rate through transaction (Fixed rate) N Liability UTIL_BR rate LIAB_BR rate
  • Fixed Exchange Rate at subline.
  • Only the subline uses Fixed rate - both during Online transactions and revaluation (if the fixed rate is modified).
  • Other entities in hierarchy uses the branch card rates.
    • Online – Utilization branch card rates.
    • Revaluation – Liability branch card rates.
Mainline UTIL_BR rate LIAB_BR rate
Subline Fixed Rate Modified Fixed rate

Table 3-7 Exchange Rate Combinations

Exchange Rate Combinations UPWARD_PROPAGATION Entities(Hierarchy) Rate considered - Online Rate considered – Revaluation (Batch) Remarks
Fixed Exchange rate through transaction (Fixed rate) Y Liability Fixed Rate Modified Fixed rate
  • Fixed Exchange Rate at subline.
  • All the entities up in the hierarchy, use Fixed rate - both during Online transactions and revaluation (if the fixed rate is modified).
Mainline Fixed Rate
Subline Fixed Rate

Table 3-8 Exchange Rate Combinations

Exchange Rate Combinations UPWARD_PROPAGATION Entities(Hierarchy) Rate considered - Online Rate considered – Revaluation (Batch) Remarks
Amount through transaction which derives the rate (Fixed Amount) N Liability UTIL_BR rate LIAB_BR rate
  • Fixed Amount at subline.
  • Only the subline uses Fixed amount - both during Online transactions and revaluation (if the Fixed amount is modified).
  • Other entities in hierarchy uses the branch card rates.
    • Online – Utilization branch card rates.
    • Revaluation – Liability branch card rates.
Mainline UTIL_BR rate LIAB_BR rate
Subline Rate based on Fixed Amount

Rate derived based on Modified Fixed Amount

Table 3-9 Exchange Rate Combinations

Exchange Rate Combinations UPWARD_PROPAGATION Entities(Hierarchy) Rate considered - Online Rate considered – Revaluation (Batch) Remarks
Amount through transaction which derives the rate (Fixed Amount) Y Liability Rate based on Fixed Amount Rate derived based on Modified Fixed Amount
  • Fixed Amount at subline.
  • All the entities up in the hierarchy, use Rate derived based on Modified Fixed Amount - both during Online transactions and revaluation (if the fixed rate is modified).
Mainline Rate based on Fixed Amount
Subline Rate based on Fixed Amount

Table 3-10 Exchange Rate Combinations

Exchange Rate Combinations UPWARD_PROPAGATION Entities(Hierarchy) Rate considered - Online Rate considered – Revaluation (Batch) Remarks
Rate Agreement Parameters (FX Rate) N Liability UTIL_BR rate LIAB_BR rate
  • FX Rate defined only at subline.
  • Only the subline uses FX Rate - both during Online transactions and revaluation (if the FX Rate is modified).
  • Other entities in hierarchy uses the branch card rates.
    • Online – Utilization branch card rates.
    • Revaluation – Liability branch card rates.
Mainline UTIL_BR rate LIAB_BR rate
Subline FX Rate-subline Modified FX Rate-subline

Table 3-11 Exchange Rate Combinations

Exchange Rate Combinations UPWARD_PROPAGATION Entities(Hierarchy) Rate considered - Online Rate considered – Revaluation (Batch) Remarks
Rate Agreement Parameters (FX Rate) N Liability UTIL_BR rate LIAB_BR rate
  • FX Rate defined at both mainline and subline.
  • Both the mainline and subline uses their respective FX Rates- both during Online transactions and revaluation (if the respective FX Rates are modified).
  • Liability in hierarchy uses the branch card rates.
    • Online – Utilization branch card rates.
    • Revaluation – Liability branch card rates.
Mainline FX Rate - mainline Modified FX Rate - mainline
Subline FX Rate - subline Modified FX Rate - subline

Table 3-12 Exchange Rate Combinations

Exchange Rate Combinations UPWARD_PROPAGATION Entities(Hierarchy) Rate considered - Online Rate considered – Revaluation (Batch) Remarks
Rate Agreement Parameters (FX Rate) Y Liability FX Rate - subline Modified FX Rate - subline
  • FX Rate defined only at subline.
  • All the entities in the hierarchy use FX Rate of subline both during Online transactions and revaluation (if the FX Rate is modified).
Mainline FX Rate - subline
Subline FX Rate - subline

Table 3-13 Exchange Rate Combinations

Exchange Rate Combinations UPWARD_PROPAGATION Entities(Hierarchy) Rate considered - Online Rate considered – Revaluation (Batch) Remarks
Rate Agreement Parameters (FX Rate) Y Liability FX Rate - subline Modified FX Rate - subline
  • FX Rate defined at both mainline and subline.
  • Both the mainline and subline uses their respective FX Rates- both during Online transactions and revaluation (if the respective FX Rates are modified).
  • Liability in hierarchy uses the FX Rate of Subline due to obelcm.parameter.ccyPropagationEnabled set as ‘Y’.
Mainline FX Rate - mainline
Subline FX Rate - subline

Note:

  • All above combinations except FX Rate is equally applicable for collaterals.
  • Unlike facilities, collaterals will not have hierarchy associated.
  • Specific revaluation batches are detailed in section Currency Revaluation.

Parent topic: Cross Currency Related