• Define Product Types:

  The creation of financial transactions and management of positions in the Transaction Manager is based on product types.

  To create product types in Customizing, choose  OTC Derivatives Transaction Management Product Types Define Product Types .

  Select the OTC Swaps tab page and then choose New Entries.

  • Assign a key for the product type (81A, for example).

  • Assign the product type a long text up to 30 characters and a short text no longer than 10 characters.

  • Enter 810 (commodity swap) as the product type. Save your settings.

• Define transaction types for your corresponding product types:

  • Choose  Transaction Types Define Transaction Types to create at least one transaction type for the following transaction categories:

    • 300 Payer: Outgoing payments are fixed, incoming payments are variable

    • 301 Payee: Incoming payments are fixed, outgoing payments are variable

    • 302 Basis: Variable against variable payments

    • 303 Fix to Fix: Fixed against fixed payments

  • Settings in the Commodity Swap area:

    With the Swap Symmetry setting, you can specify that the system assists you with data entry by proposing default values for you to apply. You can use the Flow Generator setting to specify whether flows are generated automatically for commodity swaps. For more information, see Swap Symmetry of Commodity Swaps and Flow Generator for Commodity Swaps.

    For the system to generate only a payment for the difference between an incoming and an outgoing flow, activate the Use Netting setting. Otherwise, the system always creates a separate payment for the incoming flow and for the outgoing flow.

  • In the Customizing activity Define Flow Types, create the transaction flow types for transaction management. Some examples are:

    • 1107 Nom.Unit Decr.(Not Rel.f.Pos) for flow category: 10 Principal Increase

    • 1117 Nom.Unit Decr.(Not Rel.f.Pos) for flow category: 11 Principal Decrease

    • 1310 Cash Settlement for flow category: 31 Cash Settlement

  • In the activity Assign Flow Types to Transaction Type, assign the relevant flow types (such as 30 and 31) to each transaction type.

  • Define the relevant update types and assign them to the corresponding transaction types in the Update Types section. Examples:

    • DE1107 (Nominal Unit Increase)

    • DE1117 (Nominal Unit Decrease)

  • Define field selections and assign these to the relevant transaction types. To do this, choose  General Settings Transaction Management Define Field Selection .

Master Data and Market Data

• Make the necessary settings for the commodity master data by choosing  Transaction Manager Listed Derivatives Master Data Commodities . See also: Commodity Master Data.

• For the system to be able to fix prices, you need to store prices in the activity under  Treasury and Risk Management Basic Functions Market Data Management Commodities Enter Commodity Prices (transaction FC17).

• Settings for managing positions for commodity swaps:

  • Determine the steps to be taken and the order in which they should be carried out for the key date valuation and the determination of derived business transactions by choosing  Transaction Manager General Settings Accounting Settings for Position Management Define Position Management Procedure and Assign Position Management Procedure. You can then create a position management procedure for the position management category OTC Derivatives.

  • Assign the update types required for valuation based on the position management procedure by choosing  General Settings Accounting Key Date Valuation Update Types Assign Update Types for Valuation .

  • Assign the update types required for the derived business transactions. When doing this, observe the position management procedure. To do this, choose  General Settings Accounting Derived Business Transactions Update Types Assign Update Types for Derived Business Transactions .

• To make the settings required for posting the relevant update types to Accounting, choose  General Settings Accounting Link to Other Accounting Components .