PURPOSE
To show illustration of money market loan rollover – partial.
OVERVIEW
i. In a rollover, CS Lucas system automatically create a new Money Market Transaction for the rollover trade.
ii. The settlement is cleared through a “system clearing account”.
iii. The accounting is deal with as illustrated below. The same treatment is used for loan and deposit (placements).
TRANSACTION DETAILS
| Accounting Base Ccy |
| Trade ID |
| Trade Date |
| Value Date |
| Maturity Date |
| Currency |
| Amount |
| Rate |
| Accrual Method |
| Total Interest |
| Maturity Amount |
Original Trade
| USD |
| MMK1001 |
| 3-Feb-03 |
3-Feb-03 |
3-Apr-03 |
SGD |
| 1,000,000.00 |
5.1232% |
| Act/365 |
8,281.34 |
1,008,281.34 |
New Rollover Trade
| USD |
| MMK1002 |
| 3-Apr-03 |
3-Apr-03 |
25-Apr-03 |
SGD |
| 1,000,000.00 |
5.1500% |
| Act/365 |
3,104.11 |
1,003,104.11 |
SUMMARY OF JOURNALS
| ID | Date | Description |
|---|---|---|
| J6 | 3-Apr-03 | Money Market Loan Maturity (Original Trade) |
| J1 | 3-Apr-03 | Repayment of Money Market Loan (Cash Deal) |
| J2 | 3-Apr-03 | Money Market Loan Start |
| J3 | 25-Apr-03 | Money Market Loan Maturity |
J6 Money Market Loan Maturity (Original Trade)
| TradeID | PostDate | B/P | Account | Ccy | Ccy Amount | Exc Rate | Ccy | Base Amount | Line |
|---|---|---|---|---|---|---|---|---|---|
| MMK1001 | 3-Apr-03 | P | MMK - Loan Interest Expense | SGD | 8,281.34 | 0.571525 | USD | 4,732.99 | J6a |
| MMK1001 | 3-Apr-03 | B | MMK - Loan | SGD | 1,000,000.00 | 0.567456 | USD | 567,456.38 | J6b |
| MMK1001 | 3-Apr-03 | B | Cash at Bank (Clearing A/C) | SGD | -1,008,281.34 | 0.581416 | USD | -586,230.53 | J6c |
| MMK1001 | 3-Apr-03 | P | FX - Realised Losses - Revenue | SGD | 0.00 | USD | 81.91 | J6d | |
| MMK1001 | 3-Apr-03 | P | FX - Realised Losses - Capital | SGD | 0.00 | USD | 13,959.25 | J6e |
J1 Repayment of Money Market Loan (Cash Deal)
| TradeID | PostDate | B/P | Account | Ccy | Ccy Amount | Exc Rate | Ccy | Base Amount | Line |
|---|---|---|---|---|---|---|---|---|---|
| CDL1001 | 3-Apr-03 | B | Cash at Bank (Clearing A/C) | SGD | 8,281.34 | 0.567456 | USD | 4,699.30 | J1a |
| CDL1001 | 3-Apr-03 | B | Cash at Bank | SGD | -8,281.34 | 0.567456 | USD | -4,699.30 | J1b |
J2 Money Market Loan Start
| TradeID | PostDate | B/P | Account | Ccy | Ccy Amount | Exc Rate | Ccy | Base Amount | Line |
|---|---|---|---|---|---|---|---|---|---|
| MMK1002 | 3-Apr-03 | B | Cash at Bank (Clearing A/C) | SGD | 1,000,000.00 | 0.567456 | USD | 567,456.38 | J2a |
| MMK1002 | 3-Apr-03 | B | MMK-Loan | SGD | -1,000,000.00 | 0.567456 | USD | -567,456.38 | J2b |
Note J2a: The booking rate on 3-Apr-2003 is 1.76225 (multiplier 0.567456). The rate is rounded to 6dp for display. Full precision is used in calculation.
J3 Money Market Loan Maturity
| TradeID | PostDate | B/P | Account | Ccy | Ccy Amount | Exc Rate | Ccy | Base Amount | Line |
|---|---|---|---|---|---|---|---|---|---|
| MMK1002 | 25-Apr-03 | P | MMK - Loan Interest Expense | SGD | 3,104.11 | 0.572080 | USD | 1,775.80 | J3a |
| MMK1002 | 25-Apr-03 | B | MMK - Loan | SGD | 1,000,000.00 | 0.567456 | USD | 567,456.38 | J3b |
| MMK1002 | 25-Apr-03 | B | Cash at Bank | SGD | -1,003,104.11 | 0.562661 | USD | -564,407.27 | J3c |
| MMK1002 | 25-Apr-03 | P | FX - Realised Gains - Revenue | SGD | 0.00 | USD | -29.24 | J3d | |
| MMK1002 | 25-Apr-03 | P | FX - Realised Gains - Capital | SGD | 0.00 | USD | -4,795.67 | J3e |
Note J3a: The average multiplier rate between 3-Apr and 25-Apr is 0.572081. See Exchange Rates below. Note that the last day of the loan is not included.
Note J3d: The realised foreign exchange gain on interest expense is analyzed as follows:
| SGD | Rate+ | USD |
|
| At Closing Rate | 3,104.11 | 0.562661 | 1,746.56 |
| At Average Rate | 3,104.11 | 0.572081 | 1,775.80 |
| Gain in exchange | 29.24 |
+ Rates used for calculation are in full precision. Illustrated rates are rounded to 6dp.
Note J3e: The realised gain on the loan is analyzed as follows:
| SGD | Rate+ | USD |
|
| At Closing Rate | 1,000,000.00 | 0.562661 | 562,660.71 |
| At Start Date | 1,000,000.00 | 0.567456 | 567,456.38 |
| Gain in exchange | 4,795.67 |
+ Rates used for calculation are in full precision. Illustrated rates are rounded to 6dp.
EXCHANGE RATES
Our illustration assumes the company uses different daily exchange rates for accounting.
Average rates are computed by using the multiplier rate from trade/transaction currency to the base currency each day and averaging this over the relevant period.
The following rates were used for this illustration.
Spot Rate
| Date | USD/SGD | SGD/USD* |
|---|---|---|
| 3-Apr-03 | 1.762250 | 0.567456 |
Average
| From Date | To Date | SGD/USD* |
|---|---|---|
| 3-Apr-03 | 24-Apr-03 | 0.572081 |
*Rates used for calculation are in full precision. Illustrated rates are rounded to 6dp.
FREQUENTLY ASKED QUESTIONS
RELATED INFORMATION
CHANGE HISTORY
| Date | By | Changes |
|---|---|---|
| 08-Apr-2004 | CS | Creation. |
| 09-Jun-2016 | RJ | Reformatted. |
| 23-Apr-2020 | LT | Re-formatting. |
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