OTC Interest Rate Instrument 
Use
Trading and processing of OTC interest rate instruments allows you to control liquidity in your company and recognize, analyze and hedge interest risks.
Prerequisites
Before using transaction management, the maintenance of master data is required. You must
Business partners, assign the corresponding roles to them and maintain transaction authorizations. The processing of financial transactions requires that you have defined the banks as authorized business partners with the corresponding payment details in the system.
Standing Instructions (correspondence, payment details) and release the business partner.
You must make the following settings in Customizing:
- Definition of the product type (as long as you do not wish to use the standard product types, you can define these individually). Based on product types, financial transactions are created and managed, and positions are managed. Example of a product type: Australian FRA.
- Definition of the transaction type. The financial transaction type determines the types of transactions that can be carried out with a certain product type and controls the transaction and position management process. Example: Purchase.
- Definition of the flow type. Flow types describe different changes to payment flows. Example: Cash settlement.
- Assignment of the flow type to the transaction type.
- Definition of the condition type. This determines the structure characteristics displayed when creating transactions. Example: Interest rate adjustment.
Refer to the relevant unit in the Implementation Guide (IMG).
You can then define financial transactions in the system.
Features
The product types in the interest rate instrument area are:
Swap