Issue Currency Changeover (TR-TM-SE) 

Purpose

As part of European Monetary Union (EMU), it is anticipated that almost all securities which have been issued in a participating currency will be converted to euro on a certain key date specified by the issuer before the end of 2001.

Since all flows and documents in the R/3 Securities component are not only recorded in local currency, but also in the issue currency, the issue currency of a security can only be changed if all the documents and flows which link to the security are also translated. The system carries out both steps automatically as part of the issue currency changeover.

You can change over the issue currency either before or after the local currency changeover.

The following examples look at four different scenarios for the issue currency changeover:

1: Issue currency changeover after the local currency changeover

LC = IC = DEM

LC changeover as at 01/01/1999

IC changeover as at 01/01/2001

 

 

LC = Local currency

IC = Issue currency

FC = Foreign currency (participating currency)
  1. Before the local currency changeover (01/01/1999) from DEM to EUR, all securities are managed as local currency securities.
  2. In the period between the local currency changeover and the issue currency changeover (01/01/1999 to 01/01/2001), all the securities are managed as foreign currency securities.
  3. After the issue currency changeover (01/01/2001), all securities are managed as local currency securities again.

 

2: Issue currency changeover after the local currency changeover

(LC ¹ IC)

LC = DEM / IC = FRF

LC changeover as at 01/01/1999

IC changeover as at 01/01/2001

 

 

LC = Local currency

IC = Issue currency

FC = Foreign currency (participating currency)
  1. Before the local currency changeover (01/01/1999) from DEM to EUR, all securities are managed as foreign currency securities.
  2. In the period between the local currency changeover and the issue currency changeover (01/01/1999 to 01/01/2001), all the securities are managed as foreign currency securities.
  3. After the issue currency changeover (01/01/2001), all securities are managed as local currency securities.

 

3: Issue currency changeover before the local currency changeover

LC = IC = DEM

LC changeover as at 01/01/2001

IC changeover as at 01/01/1999

 

 

LC = Local currency

IC = Issue currency

FC = Foreign currency (participating currency)
  1. Before the issue currency changeover (01/01/1999) from DEM to EUR, all securities are managed as local currency securities.
  2. In the period between the issue currency changeover and the local currency changeover (01/01/1999 to 01/01/2001), all the securities are managed as foreign currency securities.
  3. After the local currency changeover (01/01/2001), the securities are managed as local currency securities again.

 

4: Issue currency changeover before the local currency changeover

(LC ¹ IC)

LC = DEM / IC = FRF

LC changeover as at 01/01/2001

IC changeover as at 01/01/2000

 

 

LC = Local currency

IC = Issue currency

FC = Foreign currency (participating currency)
  1. Before the issue currency changeover (01/01/2000) from DEM to EUR, all securities are managed as foreign currency securities.
  2. In the period between the issue currency changeover and the local currency changeover (01/01/2000 to 01/01/2001), all the securities are still managed as foreign currency securities.
  3. After the local currency changeover (01/01/2001), all securities are managed as local currency securities.

 

In examples 1 and 3, a local currency security is temporarily managed as a foreign currency security. If you perform a valuation during this period, this may lead to write-ups/write-downs in the foreign currency (rounding errors). If required, you can set up account determination to post the corresponding flows for foreign currency valuation to a special account. After the second changeover, the foreign currency valuation flows are added to those for valuation of the security.

Features

The following sections describe the preparation activities, the conversion process and any cleanup activities required for the issue currency changeover to the euro.