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Procedure documentationCreating Non-Deliverable Forwards

 

This section describes how to create a non-deliverable forward (NDF).

Prerequisites

See also: Non-Deliverable Forward (NDF)

Procedure

  1. In the application menu of the Transaction Manager, choose Start of the navigation path Foreign Exchange Next navigation step Trading End of the navigation path, and then run the function Create Financial Transaction (transaction FTR_CREATE).

  2. Enter a company code, a product type for NDFs, a transaction type, and your business partner.

    If you have specified external number assignment, you enter the key that uniquely identifies a financial transaction within a company code in the Transaction field in the External Number Assignment area. Otherwise, the system will automatically assign a number.

    Enter the desired activity (Order or Contract).

    Choose Create (Enter).

  3. On the Structure tab page, you enter the data of the transaction:

    • Enter the purchase currency and the amount.

    • Enter the sale currency and the amount.

    • Enter the Value Date and Fixing Date.

      Note Note

      • In the activity Define Non-Deliverable Currencies, the system checks which currency is the non-deliverable currency and proposes the other currency as the settlement currency. The settlement currency is the currency in which the settlement amount is paid.

        Exception: If the non-deliverable currency is the local currency, the system proposes it as the settlement currency.

      • You can change the settlement currency proposed. However, settlement has to use one of the currencies involved. Settlement is not possible in a third currency.

      • The system uses these amounts to calculate the resulting exchange rate and compares this exchange rate against the current entries for currency exchange rates and foreign exchange swap rates in the market data tables. If the entered values differ significantly from the values stored in the market data tables, the system issues a warning message. Furthermore, the current exchange rates are displayed in the transaction.

      • If you specify just one amount and the currency of the second amount, and enter the spot rate in the Spot field and the swap rate in the Swap field, the resulting forward price is entered automatically in the Price field (spot + swap = price) and the missing amount of the transaction is calculated.

        The system stores as fixed value the value that you enter manually. When the price changes subsequently, the manually entered amount is not changed, and the other amount is recalculated.

      End of the note.

  4. Enter the necessary data on the following tab pages:

  5. Save your entries.

    When you save the financial transaction, the position indicator is determined automatically. If the system cannot determine the position indicator, you need to create it manually by choosing Start of the navigation path Environment Next navigation step Position Indicator End of the navigation path.

  6. To process an NDF further, you can use the function Edit Financial Transaction (transaction FTR_EDIT).

    See also: Editing Non-Deliverable Forwards