Example: Change to the External Limit of a Participant Master Contract
Your master contract-managing system has a facility with the following participants, who have the same currency of Euro:
Main Master Contract MC1
Participant master contract MC2
Participant checking account ACC1
Participant checking account ACC2
The master contract hierarchy is structured as follows: Participant master contract MC2 is assigned below the main master contract MC1. The checking accounts ACC1 and ACC2 are assigned below the participant master contract MC2.
Customizing
Both master contracts have a product in which the Facilities feature is active, and that you have set up as follows:
Facility Control
Attribute |
Value |
Credit Clearing Mode |
1 - Debit Balance: The utilization balance of a master contract is the sum of all negative balances of the participants in this master contract. The system ignores positive balances. |
Clearing Mode for Currency Translation |
1 - Clearing After Currency Translation |
Utilization Calculation
Main Master Contract:
The system is to check the nominal utilization against the global external limit. The system is to check the effective utilization against the global internal limit. The nominal utilization includes participant master contracts and the calculation basis "Global external limit + possible overdraft". The effective utilization includes participant master contracts with the calculation basis "Effective utilization of participant".
Participant Master Contract:
The system is to check the nominal utilization against the global external limit of the participant master contract. The system is to check the effective utilization against the global internal limit. The nominal utilization includes participant checking accounts with the calculation basis "External limit". The effective utilization includes participant checking accounts with the calculation basis "External limit".
Master Contract and Account Processing
Main master contract MC1 has a committed limit of EUR 150,000 and a tolerated overdraft limit of EUR 50,000. Participant master contract MC2 has a committed limit of EUR 80,000 and a tolerated overdraft limit of EUR 20,000.
Participant checking account ACC1 has a committed limit of EUR 40,000 and participant checking account ACC2 has a committed limit of EUR 30,000. The account balance is zero for both participants.
Facility Display Function
In the Display Master Contract Facility feature, the system displays the following calculation results for the utilization.
Calculation of the Nominal Utilization:
Participants |
Global External Limit |
Utilized Amount |
Non-Utilized Amount |
Subtotal |
MC1 |
150,000 |
– 80,000 |
70,000 |
|
MC2 |
80,000 |
– 70,000 |
10,000 |
|
ACC1 |
– 40,000 |
|||
ACC2 |
– 30,000 |
Calculation of the Effective Utilization:
Participants |
Global Internal Limit |
Utilized Amount |
Non-Utilized Amount |
Subtotal |
MC1 |
200,000 |
0 |
200,000 |
|
MC2 |
100,000 |
0 |
100,000 |
|
ACC1 |
0 |
|||
ACC2 |
0 |
Limit Increase for Participant Master Contracts
You now increase the committed limit of the participant master contract MC2 to EUR 160,000. When you save the increase, the system checks the limits for the facility. In the limit check, the system finds that the global external limit of the main master contract MC1 (EUR 150,000) was exceeded by this change, and issues an error message. Therefore, you do not make the change.
Limit Decrease for Participant Master Contracts
You now decrease the committed limit of the participant master contract MC2 to EUR 50,000. When you save the decrease, the system checks the limits for the facility. During the limit check, the system finds that the nominal utilization of the participant accounts ACC1 and ACC2 (EUR 40,000 and EUR 30,000) would exceed the new external limit of participant master contract MC2 (EUR 50,000). The system generates an error message. Therefore, you do not make the change.