A new valuation of the position can take place on each key date. If you use the valuation margin method, this is supposed to prevent an unmanageable number of payables/receivables flowing between the counterparties over a long period of time. The payables/receivables are, therefore, immediately settled when they arise. The maximum loss here is then only a daily fluctuation.

Although the amounts are credited to/debited from the margin account daily and even discounted in the variation margin process, they are unrealized gains/losses. The position as such is pending. Consequently, you must differentiate these amounts in accounting from amounts that have arisen as realized gains or losses via the close transactions.

Refer to the relevant unit in the Implementation Guide (IMG) via Derivatives ® Acccounting ® Define margin management/flow types/Assign flow types to flow categories.

You must fill in the following fields to calculate the variation margin. Security ID number, company code, rate type and exchange. You can carry out a test run without database changes, otherwise an update run takes place.

• This valuation can be reversed.
• The daily calculated variation margin, rate/price gains and losses from close transactions as well as the variation margin of the close transaction are in the variation margin, Journal. The posting information for these flows is also output here.

Choose Accounting ® Posting ® Variation Margin (and/or Reverse Variation Margin /Variation Margin Journal).

Business backgrounds:

1. A new individual position (Item) is generated by each Open transaction.
2. This can be closed by one or several Close transactions.
3. When you enter the Close, the assignment for one or several individual positions is offered. The assignment is carried out manually (Individual item assignment).
4. All open positions can be valued daily with the variation margin at the settlement rate. The calculation is carried out by calling up the ‘Variation margin’ report.
5. When you enter a close transaction, the concluding variation margin and price gain is determined and posted.
6. The posting of the variation margin and the realized gains and losses takes place when you save the order execution/contract.

If the flow with category, purchase/sale, is marked as posting-relevant in Customizing, it is then posted in the posting run - that is, in a separate activity.