Process Flow for a Non-Deliverable Forward (NDF)

This section describes the process flow for a non-deliverable forward. The process flow depends on the processing category that is selected in the Customizing settings for the product type; the processing category specifies the activity chain for your NDFs:

Order - Contract - Settlement - Fixing - Settlement for Fixing (processing category 121)
Order - Contract - Fixing (processing category 120)

Flows of a transaction acquire their posting status on the basis of the activity reached and other circumstances (such as whether the release function has been activated). For example, if an NDF has two posting-relevant activities and only additional flows are flagged for posting in the case of the first activity (contract or settlement), the posting status for cash settlement at this time is Activity does not allow posting. If the posting-relevant activities Fixing or Fixing Settlement are reached, cash settlement and additional flows due at this time are flagged for posting.

Process

Function	AWT 121	AWT 120	Comments
Creation of a Contract
1. Create Order/Contract	X	X	When a contract is created, the following flows are generated: Open flow (status Plan, not relevant for posting) on the contract date An open flow designates the start of a transaction. A flow in the purchase currency and a flow in the sale currency in accordance with the contract data. They have the status Plan and are not relevant for posting If any additional flows have been created, they are generated. The flow for the cash settlement is created for the value date but does not contain an amount yet (status Plan, posting status: Activity does not allow posting). Close flow (status Plan, not relevant for posting) A close flow designates the end of a transaction. The flows are displayed partially in the transaction cash flow and partially in the subledger cash flow (transaction TPM13). See also: Creating Non-Deliverable Forwards (transaction FTR_CREATE) Cash flow for the transaction Subledger Cash Flow With the open flow, the NDF is created as a position. The position components of the NDF are still set to zero. Consequently, the NDF is created with an initial book value of zero.
2. Execute Order	X	X	Editing Non-Deliverable Forwards
3. Dispatching Correspondence	X	X	You can use the Correspondence Framework [available with the business function TRM, Correspondence Framework (FIN_TRM_CORR_FW)]. If you do not use the new correspondence framework, the existing correspondence functions are available. See also: Correspondence
4. Settle	X		Editing Non-Deliverable Forwards
5. Release	X	X	Dependent on the setting in Customizing See also: Release
6. Post Transaction	X	X	Only relevant when there are posting-relevant additional flows such as charges. When the activity categories Settlement or Contract of the activity chain are reached and saved, the additional flows of the transaction acquire the status Flagged for Posting. The update to the general ledger for the operative valuation area is triggered in the Accounting area with the function Execute Posting [transaction TBB1]. After the posting report has been run, the flows acquire the posting status Posted and are converted from plan records into actual records. For the parallel valuation areas, the posting is made either via the function Execute Posting mentioned above and/or the function under Accounting Transaction Fix, Post, or Reverse Business Transactions [transaction TPM10]. This depends on whether, when posting the transaction, you have only posted the operative valuation area using transaction TBB1 or you have also made postings to the parallel valuation areas.
During the Term of the NDF
You can assign the NDF as a hedging instrument in a hedging relationship in Hedge Management. You can use key date valuation in the Transaction Manager to valuate the position. You can determine the net present value in the Market Risk Analyzer.
Fixing and Cash Settlement
1. Fixing	X	X	Editing Non-Deliverable Forwards When the activity categories Fixing Settlement or Fixing are reached and saved, the system calculates cash settlement and updates the relevant flow. The cash settlement flow acquires the status Flagged for Posting. Furthermore, the system creates a derived business transaction for the amount of the cash settlement and this business transaction posts the rate loss/gain to the profit and loss statement.
2. Settle	X
3. Dispatching Correspondence	X	X	See above
4. Post Transaction	X	X	With the function Post Transaction [transaction TBB1], posting of the clearing flow is triggered. After the posting report has been run, the flows acquire the posting status "Posted" and are converted from plan records into actual records. If additional flows are also flagged for posting at this time, they are also posted. For the parallel valuation areas, the posting is made either using transaction TBB1 or via the function under Accounting Transaction Fix, Post, or Reverse Business Transactions [transaction TPM10]. This depends on whether, when posting the transaction using transaction TBB1, you only posted the operative valuation area or you also made postings to the parallel valuation areas. It also depends on the settings that you have made in Customizing for the derived business transactions.
5. Fix and Post Derived Business Transactions (transaction TPM18)	X	X	Fix and Post Derived Business Transactions