Foreign Exchange

Foreign exchange covers all the business processes arising from both classical currency trading and trading with OTC currency options. This process spans the whole trading process, starting from entering the transaction, processing it, and transferring the data to Financial Accounting. A range of evaluation options is also available for reporting purposes.

Integration

The integration of the Transaction Management functions allows you to analyze the impact of forex trading on the liquidity situation of your company as well as the resulting currency risks.

You can maintain current market data (exchange rates, securities prices, reference interest rates, indexes etc.) in a number of ways:

Manually
Market Data File Interface: You maintain the relevant data in an external application (such as Microsoft Excel), either manually or via a data provider, and then import the data into the system in an SAP-compatible format.
By transferring the market data to the system from a spreadsheet
Datafeed: You can use the datafeed link to make market data available in the system in real time.

To access the market data management functions in the application menu, choose Start of the navigation path Treasury and Risk Management Next navigation step Basic Functions Market Data Management End of the navigation path . Alternatively, you can access them in the Foreign Exchange Trading area under Environment Market Data .

The figure below illustrates the transaction and position management process using a foreign exchange transaction as an example:

This graphic is explained in the accompanying text.

You access the Foreign Exchange Trading component by choosing Start of the navigation path Accounting Next navigation step Treasury and Risk Management Transaction Manager Foreign Exchange Trading End of the navigation path .

Features

Trading

The trading area groups together the functions for entering foreign exchange transactions. Besides entering transactions, it also enables you to call up information about previously entered transactions or to make changes. Collective processing functions are available to help you manage your foreign exchange transactions efficiently.

Forex trading incorporates the following product types:

Spot exchange and forward exchange transactions
Forex swap transactions
OTC currency options (Overview of Product Types)

Currency options are handled in the derivatives area.

You can use the Position Monitor to obtain an overview of the current foreign currency risk in your company.

In the trading area, you can use a decentralized process to enter foreign exchange transactions from the view of the company code entering the transaction (Internal Foreign Exchange Trading).

Back Office

Once you have entered financial transactions in the trading area, you settle the transactions in the back-office area. The back office area also contains functions for checking and changing the transactions. The key aspects of postprocessing are as follows:

Entering additional transaction data, such as adding information that is relevant for back-office processing
Preparing for posting and payment, for example, by checking the accounts used
Generating correspondence in the form of internal or external confirmations

Collective processing functions are also available in the back office. The back-office also includes functions for netting transactions and for entering or editing references.

Accounting

Once you have entered the transactions in the Trading area and have checked and completed them in the Back Office area, you then submit them to accounting. The accounting area includes functions for transferring data to Financial Accounting, such as posting reports or position management postings. It also includes functions for parallel valuation.

Master Data Management

You use master data to manage transactions in the Transaction Manager.

Information System

The information system provides a range of reports for analyzing your money market transactions. The Money Market Information System is part of the Transaction Manager information system, which offers analyses and evaluations across the whole of the Treasury and Risk Management dataset.

The link to the SAP drilldown reporting tool and SAP Query also allows you to define your own reports in addition to those provided by SAP.

See also:

Information System