It is possible in TS to set up transfer pricing rules based on a credit rating for each subsidiary. When entering loans and deposits TS will automatically suggest a spread based on the rules.
Master data / Tags
Set up a new Tag "Credit rating" and add all your rating values in the new list. Mark the new Tag as Company tag and remove deal part tag. The new Tag will then only be visible in Companies.
Master data / Companies
Enter the correct credit rating for each subsidiary.
Risk management / Transfer Pricing Rules
Permission needed
To enter and update rules: 'Update transfer pricing rules'.
In Deal input when entering Loans: 'Read transfer pricing rules' and 'Price Subsidiary Requests'
Add a rule for each credit rating and if applicable currency and maturity.
Note! It is also possible to select if the spread should apply to both Loans and Deposits or just Deposits for example.
Begin - From which date the rule should apply
End- If you would like to keep history of changes set end date when the rule do not longer apply
Currency- if it should be a specific spread for a certain currency ( default All)
Maturity Period - if it should be a certain spread for a specific maturity period ( Default All).
Asset Spread- the spread in % that will be added to the interest
Liability Spread- the spread in % that will be added to the interest
Applies to- Default is Loan/ Deposit but one could also be used on Bank account interest (one per currency)
Example:
All maturities from O/N up to 1Y will get spread 0,5/0,25 and all maturities above 1Y will get spread 1/2
Bank account interest
The liability and asset spread is applied for the bank account interest on the original deal, the subsidiary receive the asset margin on their surplus and the liability margin on their deficit.
Enter new loan or deposit
In the wizard TS will automatically suggest the spread based on transfer pricing rules.
Update spreads on existing deals
Setup a Transfer pricing activity in the Autopilot
Select which deals/transactions that you want to update the spread for.
For example Value date from a specific date.
The transfer pricing rules can be prepared in advance. And will consider the balance date in the activity as from when it should be runed.
In the example below the second spread will be used when balance date in the activity is 2024-12-31 or later. Transactions with Maturity date equal or greater than balance date will be updated.
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