Transaction Manager in SAP Treasury and Risk Management __ Copy sfmr-b8z2-entx-9v7d

Prévia do material em texto

SAP PRESS E-Bites
Transaction Manager in SAP® Treasury
and Risk Management
Bryša Fritzsche Heß Jarré
Lövenich Martin Müller
This E-Bite is protected by copyright. It contains a digital watermark, a signature that
indicates which person may use this copy. Full Legal Notes and Notes on Usage can be
found at the end of this publication.
Rudolf Bryša, Thomas Fritzsche, Markus Heß, Sönke Jarré, 
Reinhold Lövenich, Andreas Martin, Klaus G. Müller
Transaction Manager in 
SAP® Treasury and Risk 
Management
Copy No. sfmr-b8z2-entx-9v7d
for personal use of
Jennifer Ogbonna
jennyogbonna2@gmail.com
SAP PRESS E-Bites
SAP PRESS E-Bites provide you with a high-quality response to your specific project
need. If you’re looking for detailed instructions on a specific task; or if you need to
become familiar with a small, but crucial sub-component of an SAP product; or if you
want to understand all the hype around product xyz: SAP PRESS E-Bites have you
covered. Authored by the top professionals in the SAP universe, E-Bites provide the
excellence you know from SAP PRESS, in a digestible electronic format, delivered (and
consumed) in a fraction of the time!
Mirosalv Antolovic
JavaScript for ABAP Developers
ISBN 978-1-4932-1282-8 | $9.99 | 55 pages
Akash Kumar
Improving SAP HANA Performance
ISBN 978-1-4932-1300-9 | $14.99 | 76 pages
Diego Pinasco
Mid-Year Legacy Asset Migration in FI-AA
ISBN 978-1-4932-1287-3 | $14.99 | 70 pages
The Authors of this E-Bite
Rudolf Bryša, Thomas Fritzsche, Markus Heß, Sönke Jarré, Reinhold Lövenich, Andreas
Martin, and Klaus G. Müller work at SAP. They have many years’ experience of working
with SAP Treasury and Risk Management in various capacities. Learn more about the
authors at https://www.sap-press.com/sap-treasury-and-risk-management_3166/authors/.
http://www.sap-press.com/e-bites
https://www.sap-press.com/sap-treasury-and-risk-management_3166/authors/
http://www.sap-press.com/3933
http://www.sap-press.com/3952
http://www.sap-press.com/3940
4
 
What You’ll Learn
Learn how different financial instruments are mapped as financial
transactions and how these transactions can be created and processed.
Examine transaction management subareas like trading, back-office
processing, and operative reporting. Use sample implementation sce-
narios to understand the transaction management architecture. From
securities to commodities, you will understand financial transactions
and transaction management fully with the help of this E-Bite!
1 Financial Transaction. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
1.1 Conventions of Use . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
1.2 Transaction Management Entry Screen . . . . . . . . . . . . . . . . 13
1.3 Data Screen . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
1.4 Flows . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
1.5 Conditions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
1.6 Underlying . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
1.7 Listed Financial Instruments . . . . . . . . . . . . . . . . . . . . . . . . 45
1.8 Field Selection . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
1.9 Activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
2 Trading . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
2.1 Preparation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
2.2 Decision-Making Tools . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
2.3 Trading Functions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
3 Back-Office Processing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
3.1 Interest Rate Adjustment . . . . . . . . . . . . . . . . . . . . . . . . . . 59
3.2 Price Adjustment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
3.3 Exchange Rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
3.4 References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68
3.5 Settlement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
3.6 Status Management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70
3.7 Workflow. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71
3.8 Change Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73
© 2024 by Rheinwerk Publishing Inc., Boston (MA)
5
4 Operative Reporting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74
4.1 Controlling. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75
4.2 Overview . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76
5 Transaction Product Categories. . . . . . . . . . . . . . . . . . . . . . . . . . 79
5.1 Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79
5.2 Fixed-Term Deposit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 81
5.3 Deposit at Notice. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 81
5.4 Commercial Paper . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 82
5.5 Interest-Rate Instrument . . . . . . . . . . . . . . . . . . . . . . . . . . 83
5.6 Facility . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 83
5.7 Fiduciary Deposit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 84
5.8 Foreign Exchange Transaction . . . . . . . . . . . . . . . . . . . . . . 85
5.9 Cap/Floor. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 85
5.10 Interest Rate Swap . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 86
5.11 Forward Rate Agreement (FRA) . . . . . . . . . . . . . . . . . . . . . 86
5.12 Total Return Swap . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 87
5.13 Future . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 88
5.14 Repo . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 88
5.15 Forward Securities Transaction . . . . . . . . . . . . . . . . . . . . . . 89
5.16 Listed Option. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 89
5.17 OTC Option . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 90
5.18 Securities Lending . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 92
5.19 Forward . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 92
5.20 Forward Loan Purchase . . . . . . . . . . . . . . . . . . . . . . . . . . . 92
5.21 Commodity Forward . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 93
5.22 Commodity Swap. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 93
6 What’s Next?. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 94
Personal Copy for Jennifer Ogbonna, jennyogbonna2@gmail.com
6
 
1 Financial Transaction
A financial transaction is a contract between at least two business partners
governing the exchange of ownership of a financial instrument or a right
in the form of a financial instrument. The variety of different financial
instruments is also reflected in the variety of financial transactions. The
structure of financial transactions in SAP Treasury and Risk Management
comprises a description of the actions for a financial transaction and a
description of the general components of a financial transaction.
The actions for a financial transaction are divided into creating actions
and processing actions:
»When creating a financial transaction, you refer to a financial instru-
ment in the context of a company code, transaction type, product type,
partner, and possibly some other specific data.
»When processing a financial transaction, however, you use the unique
ID, which is based on the companycode and the financial transaction
number, to select an existing transaction.
These two basic procedures are reflected by the system transactions in
transaction management. Most of these transactions are two-screen trans-
actions. The first screen is known as the entry screen. When creating a
financial transaction, you must specify the context here (see Figure 3),
and when processing the financial transaction, you must select the finan-
cial transaction here, by means of its unique ID (see Figure 4). The second
screen is known as the data screen. The same screen is used whether you
are creating or processing a financial transaction. Financial transaction
data is entered here.
In addition to creating and processing financial transactions, numerous
other reports concern two-screen transactions whereby a selection is
made on the first screen and the results of the selection are displayed on
the second screen. In this case, the first screen is called a selection screen
and the second screen is called a result screen.
© 2024 by Rheinwerk Publishing Inc., Boston (MA)
Financial Transaction
7
1
Because there is a great deal of financial transaction data, the data screen
is structured using tab pages. Most of these tab pages contain characteris-
tics and key figures that are required for every financial transaction and
are independent of the characteristics of the financial instrument. These
tab pages are identical for all financial transactions.
However, it is the structure data that distinguishes between the different
financial instruments. For this reason, every financial instrument has its
own individual tab pages. The structure data is set out in basically the
same way and is based on flows, conditions, underlyings, and/or master
data. It is the financial instrument itself that determines upon which data
a financial instrument is based and how the data is set out.
You can individually configure which fields are used for data entry on the
corresponding tab pages. You can then use the field modification settings
in Customizing to define whether a field is hidden, displayed, ready for
input, or mandatory.
A financial transaction has different status values as it passes through dif-
ferent trading or back-office processing functions. Activities are used to
reflect and represent these status values clearly. The financial cash flow is
assigned to an activity in the form of flows and conditions, making it
clearer and easier to follow.
System Transaction Paths in This Chapter
This chapter does not include any menu paths for system transactions.
Depending on the financial instrument used, these system transactions can
be found in the menu under Treasury and Risk Management �
Transaction Manager � Money Market/Foreign Exchange/Derivatives/
Commodities/Securities/Debt Management and then in the corresponding
subfolder, depending on the section you are reading.
Due to the large number of system transactions used in transaction manage-
ment, omitting them from the text makes it much easier to read. We specify
the path in only a few exceptional cases.
Personal Copy for Jennifer Ogbonna, jennyogbonna2@gmail.com
Financial Transaction
8
1
1.1 Conventions of Use
The transactions within transaction management, especially those
associated with creating and processing transactions, follow certain
conventions of use. As soon as you learn these conventions, you will
find it relatively easy to use new transactions without the need for any
further instruction.
These conventions of use include the use of icons on buttons for quick
recognition of their function, the specification of precise dates using
inclusive and month-end indicators, and input helps through the use of
shortcuts for date entries and amounts. This section describes these con-
ventions in greater detail.
Using Icons
As is generally the case in SAP systems, SAP Treasury and Risk Manage-
ment also uses two types of buttons. On one hand, buttons are assigned a
descriptive text (for example, the Cash Settlement button in Figure 2).
Sometimes, this type of button also contains an icon. Over the course of
this E-Bite, we also use the descriptive text provided with such buttons.
On the other hand, buttons are frequently assigned only an icon (in other
words, no descriptive text). Generally, the function represented by the
icon is easily recognizable from the symbol used. If you place your cursor
over an icon, the exact meaning of the icon (or the underlying function) is
displayed in the form of a tooltip. In this E-Bite, we cite both the meaning
of the tooltip and show the icon itself directly in the text. Figure 1 shows
the icons most commonly used in transaction management.
© 2024 by Rheinwerk Publishing Inc., Boston (MA)
Financial Transaction
9
1
Figure 1 Commonly Used Icons in Transaction Management
Date
Both flows and conditions contain numerous date entries. In order for
these date entries to be uniquely organized for the purpose of calcula-
tions, a date field often has an inclusive indicator that specifies whether
the date entered is also included in the period it delimits. In some cases,
a month-end indicator is also used to indicate whether the date falls on
the last day of the month.
Period Calculation
The most important example of the use of inclusive and month-end indica-
tors is period calculation. If April 30, 2012 is set as a period end with a
monthly frequency and the Inclusive indicator is selected, the subsequent
period ends will be May 30, 2012 inclusive, June 30, 2012 inclusive, and so
on. If the Month-end indicator is also selected with a monthly frequency,
then the period ends would be May 31, 2012 inclusive and month end, June
30, 2012 inclusive and month end, and so on.
Other Main Flows
Expand
Compress
Other Main Flows Available
Calculate
Correspondence
User Status
Worklist
Date Preview
Display
Detail Screen
Overview
Insert Line
Delete Line
Other Object
Check
Get Variant
Flip Back
Flip Ahead
Create
Copy
Delete
Display
Cancel
Confirm
Execute
Save
Change
Update
Personal Copy for Jennifer Ogbonna, jennyogbonna2@gmail.com
Financial Transaction
10
1
Period Calculation in February
For interest calculation methods based on 30 days and a period end of
February 28, 2012 inclusive, interest is applied to 28 days. When the period
end is February 28, 2012 exclusive and month end, interest is applied to 29
days. Finally, when the period end is February 28, 2012 inclusive and month
end, interest is applied to 30 days.
Input Help
When creating financial transactions, many fields are already assigned
values that make sense in the relevant context. For example, the start of
term is already set as the current date. If, in your particular case, different
pre-assigned values would make more sense, you can use BAdIs to change
them, in some cases. In other cases, you can change only pre-assigned val-
ues by modifying the standard SAP code. Pre-assignments can also be
imported from Customizing (for example, payment details from the
standing instructions for a business partner).
In the user settings, you can configure the date format (e.g., MM/DD/
YYYY). In transaction management, a date can be entered as an absolute
value. Abbreviated notations are also recognized (e.g., 042612 as 04/26/
2012). A date can also refer to another date. For example, the end of the
term is relative to the start of the term. This relationship between date
fields is not visible on the screen, but it is stored within the system. You
can use various shortcuts to specify the direction of a relative date entry
(see Table 1).
Shortcut Meaning
+ Following day
++ Following month
+++ Following year
- Previous day
Table 1 Shortcuts for Date Entries
© 2024 by Rheinwerk Publishing Inc., Boston (MA)
Financial Transaction
11
1
Shortcuts can be used alone or be combined (see Table 2).
For amounts, you can define which abbreviations you want to use for
thousands and millions in Customizing under Treasury andRisk
Management � Transaction Manager � General Settings � Organiza-
tion � Define User Data. In the standard system, these settings are pre-
assigned with the abbreviations listed in Table 3.
Here, too, it is possible to combine shortcuts (see Table 4).
-- Previous month
--- Previous year
Example Meaning
0 Same day
+2 In two days
--4 Four months ago
+++1++3 In one year and three months
Table 2 Examples of Shortcuts for Date Entries
Abbreviation Meaning
T Thousand
M Million
Table 3 Abbreviations for Amounts
Example Meaning
2T 2,000
5.2M 5,200,000
3M20T 3,020,000
Table 4 Examples of Shortcuts for Amounts
Shortcut Meaning
Table 1 Shortcuts for Date Entries (Cont.)
Personal Copy for Jennifer Ogbonna, jennyogbonna2@gmail.com
Financial Transaction
12
1
The shortcut is converted after you press (Enter) or execute an action. You
can then check whether it corresponds to the required entry.
Even though Create Financial Transaction (Transaction FTR_CREATE) will
not be explained until the next section, we are using its data screen here
to provide an example of shortcut usage. We are performing a forward-
exchange transaction on 04/26/2012 involving the exchange of 100,000
EUR into USD on 05/26/2012 at a rate of 1.3. The value date is a relative
date entry, and we are using a standard abbreviation for the amount (see
Figure 2).
Figure 2 Data Screen for a Foreign Exchange Transaction
© 2024 by Rheinwerk Publishing Inc., Boston (MA)
Financial Transaction
13
1
1.2 Transaction Management Entry Screen
The transaction management entry screen for creating and processing
financial transactions can be accessed via many different transactions and
functions. The user will proceed differently depending on the activity he
or she is currently pursuing. The next section describes the most import-
ant transactions.
Creating a Financial Transaction
The main way of accessing the screen for creating a financial transaction is
via Create Financial Transaction (Transaction FTR_CREATE), where you
can create a financial transaction for every financial instrument in trans-
action management (see Figure 3). Also, every financial instrument has its
own transactions for creating a financial transaction. These are no longer
listed in the menu, however.
Figure 3 Creating a Financial Transaction in Transaction FTR_CREATE
Transaction FTR_CREATE allows you to enter the values you want
directly via the keyboard. However, the fields are also provided with
Personal Copy for Jennifer Ogbonna, jennyogbonna2@gmail.com
Financial Transaction
14
1
input helps. You can use the expanded list box shown in the Financial
Transaction field in to restrict the values at the financial-instrument
level so that only fields relevant to the current financial instrument are
ready for input and you only view input helps relevant to that specific
financial instrument.
Processing a Financial Transaction
The main way of accessing the screen for processing a financial transac-
tion is via Process Financial Transaction (Transaction FTR_EDIT). When
using this transaction, you not only enter the financial transaction you
want to execute, but also select the action you want to perform. The list
box allows you to restrict the displayed actions to those actions relevant
for the current financial instrument (see Figure 4).
Figure 4 Processing a Financial Transaction in Transaction FTR_EDIT
© 2024 by Rheinwerk Publishing Inc., Boston (MA)
Financial Transaction
15
1
As is the case with creating a financial transaction, every financial instru-
ment has its own transaction for each action associated with processing a
financial transaction. The entry screen in such transactions comprises the
Company Code and Transaction Number fields. You can also use these
transactions even though they are not listed in the menu.
Collective Processing
As an alternative to central or financial instrument-specific entry transac-
tions, you can also access the financial transaction processing screen via
the collective processing function. Collective processing displays an over-
view list of financial transactions and gives you the option to navigate
directly from the list to financial transaction processing.
The following collective processing functions are available for the various
financial instruments:
»Money market (Transaction TM00)
» Foreign exchange (Transaction TX06)
»OTC options (Transaction TI91)
» Interest rate derivatives (Transaction TI92)
» Futures and listed options (Transaction TI00)
»Repos (Transaction TF00)
» Securities lending (Transaction TSL00)
» Securities (Transaction TS00)
There is also central Collective Processing: Transaction Management
(Transaction FTR_00), which provides an overview of the financial trans-
actions across all financial instruments. You can also use this transaction
for operative reporting (for example, using variants and their comprehen-
sive selection options—see Figure 5).
Personal Copy for Jennifer Ogbonna, jennyogbonna2@gmail.com
Financial Transaction
16
1
Figure 5 Selection Screen for Central Collective Processing (Transaction FTR_00)
© 2024 by Rheinwerk Publishing Inc., Boston (MA)
Financial Transaction
17
1
In this case, bear in mind that the characteristics of the financial instru-
ments are so different that they cannot be represented in a standardized
way. Therefore, the result screen contains the Transaction structure
field, which specifies the most important characteristics of a financial
instrument as body text (see Figure 6).
Figure 6 Result Screen for Central Collective Processing (Transaction FTR_00)
Fast Entry and Fast Processing
Some financial instruments also offer a fast entry option. This combines
the data from the entry screen and data screen on a single screen. Both
the input-ready data and the functionality are restricted in such a way that
you can create only simple standard financial transactions using fast
entry.
The following fast-entry transactions are available:
» Fixed-term deposit fast entry (Transaction TM0F)
»Deposit-at-notice fast entry (Transaction TM1F)
»Commercial-paper fast entry (Transaction TM3F)
Personal Copy for Jennifer Ogbonna, jennyogbonna2@gmail.com
Financial Transaction
18
1
You can process the two financial instruments, namely fixed-term deposit
and deposit at notice, using the Money Market: Fast Processing transac-
tion (TM20), which is a fast-processing transaction. Several fixed-term
deposits and deposits at notice are displayed on the same screen, and you
can change the amount, interest rate, end of term, interest rate handling
in the event of a rollover, and interest capitalization here.
1.3 Data Screen
After you access the entry screen for creating or processing financial
transactions, you reach the data screen. This screen has the same layout
for all financial instruments. The financial transaction header is displayed
at the top of the screen. Depending on the financial instrument, this
includes information on the company code, financial transaction number,
activity, product type, transaction type, and security ID number (see Fig-
ure 7).
Figure 7 Data Screen for the Fixed-Term Deposit Financial Instrument
© 2024 by Rheinwerk Publishing Inc., Boston (MA)
Financial Transaction
19
1
The area below the header contains the tab pages. In principle, all finan-
cial transactions have the same tab pages, but the system displays only
those tab pages needed for the financial instrument. For example, the
Int.rate.adj. tab page is displayed only for financial instruments with a
variable interest rate calculation; it is hidden for all other financial instru-
ments.
You can also hide unwanted tab pages (apart from the Structure tab
page) by changing the relevant settings in Customizing under Treasury
and Risk Management � Transaction Manager � General Settings �
Transaction Management � Define Field Selection.
We will now discuss each of the tab pages available on screen.
» Structure tabpage
On this tab page, you can enter structure features to differentiate finan-
cial instruments from one another. We describe these features in
greater detail in Section 1.4 through Section 1.7. The system also dis-
plays the business partner at the top of the financial transaction and
provides the option to go to business partner administration (the Details
icon in Figure 7). At the bottom, in the Contract data screen area,
you can enter contract conclusion data such as the close date and time,
contact person, trader, and an external reference.
Because the Structure tab page sometimes isn't sufficient to enter all
structure features for a financial instrument, you can also use up to
three additional tab pages for this purpose.
Table 5 shows which financial instruments use this option. When used,
some of the additional tab pages can also be named Structure.
Financial Instru-
ment
Tab Page Tab Page Tab Page
Securities Trading Structure
Facility Charges Profiles Rules
Table 5 Additional Tab Pages for Structure Features
Personal Copy for Jennifer Ogbonna, jennyogbonna2@gmail.com
Financial Transaction
20
1
»Hedge Management tab page
The Hedge Management tab page is displayed if the financial transac-
tion is part of a hedging relationship. The data for the hedging relation-
ship is displayed in SAP List Viewer (formerly known as ABAP List
Viewer, or ALV). Double-clicking a row will display the hedging rela-
tionship.
» Customer-specific tab page
There are two tab pages on which you can use BAdI technology to add
your own screens and to display, enter, and save data for a financial
transaction.
»Administration tab page
The Administration tab page provides data for managing financial
transactions. In the Position assignment screen area, you use the gen-
eral valuation class to classify financial transactions according to assets
(for example, short-term assets). In the Additional fields screen area,
you can mark a financial transaction or specify connections to other
financial transactions. In the Authorization screen area, you can
define authorization groups in such a way that only particular individ-
uals are allowed to process this financial transaction. In the Central
clearing data screen area, you can determine whether the financial
transaction is to be processed from a central location and, if so, how this
Fiduciary deposit Collateral
Total return swap Dividends
Futures Trading Structure
Listed options Trading Structure
OTC option Underlying
Securities lending Collateral
Forward Underlying
Financial Instru-
ment
Tab Page Tab Page Tab Page
Table 5 Additional Tab Pages for Structure Features (Cont.)
© 2024 by Rheinwerk Publishing Inc., Boston (MA)
Financial Transaction
21
1
will happen. Finally, in the Rating screen area, you enter data in rela-
tion to the business partner and the evaluating credit rating institute.
»Other flows tab page
You can use the Other flows tab page to map flows other than nomi-
nal, interest, or repayment. These could be charges or taxes, for exam-
ple. In this case, you must have maintained corresponding flow types in
Customizing using the Other flow/condition flow category.
After entering the flow type, direction, payment amount, currency, and
payment date, you can navigate to a detail screen by double-clicking a
row that contains another flow and then storing calculation bases
there. For more information on other flows, see Section 1.4.
»Payment details tab page
The Payment details tab page contains details on payment transactions
with the corresponding business partner. This data is not entered sepa-
rately for every flow, but applies generally for the entire financial trans-
action. An ID that comprises the direction and currency, as well as a
possible restriction in relation to the validity and flow type, is used to
assign payment details to the flows. If several different payment details
are possible for a flow, the payment detail with the most precise ID is
selected.
Using the ID to Assign Payment Details
For example, let's say you specify two different sets of payment details, the
first with direction + and currency EUR, and the second with the same direc-
tion and currency but also with flow type 1900. For the appropriate direc-
tion and currency, only the first payment detail is possible for an interest rate
flow with flow type 1200 and it is assigned to the flow. For another flow
with flow type 1900 and the appropriate direction and currency, both pay-
ment details are possible, but the second, more specific payment detail is
assigned.
If you double-click a row that contains payment details, this brings you
directly to the detail screen for these payment details. This is where you
can enter more specific details on the posting and payment request.
Personal Copy for Jennifer Ogbonna, jennyogbonna2@gmail.com
Financial Transaction
22
1
When doing this, you can use a repetitive code that stands for the data
that remains unchanged in a payment transfer and therefore reduces
the administrative workload for recurring payments with the same pay-
ment details. Payment details must be created for all payment-relevant
currencies and directions of a financial transaction. The system sup-
ports you in this task by displaying the payment details in the business
partner's standing instructions as pre-assigned values when you create
a new financial transaction.
» Cash flow tab page
The cash flow tab provides you with an overview of all flows associated
with a financial transaction. It is displayed in an ALV. You can execute
various functions here. The most important are:
– Filter
You can use filters to hide unwanted flows. A filter is set by default,
displaying only structure flows. You can, however, delete or change
this filter in order to also show accrual/deferral flows, valuation
flows, and transfer posting flows.
– Variants
You can use variants to specify which features and key figures are vis-
ible for flows. Some variants are delivered in the standard SAP sys-
tem. You can use these as templates for your own variants or create
completely new variants.
– Flow detail
Double-clicking a flow will take you to the flow detail screen, which
displays further information.
– Changing or reversing flows
You can use the Flows button or the Edit flow entry in the
context menu to change a flow manually. It is also possible to flag
posted flows for reversal in the same manner. Both functions are sub-
ject to the status of the financial transaction or flow. If the transaction
or flow status does not permit the functions, you will not be able to
select them.
© 2024 by Rheinwerk Publishing Inc., Boston (MA)
Financial Transaction
23
1
»Outgoing and Incoming tab pages
For swap transactions such as the swap for OTC interest derivatives,
you can divide the cash flow into the outgoing and incoming cash
flows. This is covered by the Outgoing and Incoming tab pages. The
Cash flow tab page is not affected by this but is also displayed.
» Interest rate adjustment, Security price adjustment, and Commod-
ity price adjustment tab pages
Variable interest is applied to all OTC interest rate derivatives. Variable
interest can also be applied to the interest rate instrument and total
return swap. An overview of interest rate adjustments performed and
pending for these transactions is displayed on the Interest rate adjust-
ment tab page. For further details on interest rate adjustment, see Sec-
tion 3.1.
In the case of a total return swap, the Security price adjustment tab
page contains the same type of information for floating security prices.
Similarly, in the case of a commodity swap, the Commodity price
adjustment tab page contains the same type of information for floating
commodity prices (see Section 3.2).
Just as for the cash flow, the adjustment data is displayed in an ALV for
which you can also create your own variants. Double-clicking the icon
in the Interest fixing column will display the detailed data for this row
in the areabelow the ALV.
»Memos tab page
You can use the Memos tab page to store additional information on a
financial transaction in plain text. To do this, you must have maintained
the corresponding memo types in Customizing under Treasury and
Risk Management � Transaction Manager � General Settings �
Transaction Management � Define Memo Book. The memos repre-
sent a central function provided by SAP Basis. Therefore, you may well
have already learned how to use this function in other areas.
»Partner assignment tab page
The Partner assignment tab page provides a partner overview with all
Personal Copy for Jennifer Ogbonna, jennyogbonna2@gmail.com
Financial Transaction
24
1
relevant data on the corresponding partner for the financial transaction.
You can navigate directly to business partner administration, make
additional partner assignments, or create partners for the financial
transaction.
» Status tab page
A financial transaction can have various status values, all of which are
displayed together on this tab page:
– Correspondence
Depending on the business partner, you can use Customizing to
define whether external correspondence is to take place in the form
of a confirmation and, if necessary, a counter-confirmation. The sys-
tem displays the correspondence status here and thus, implicitly, the
Customizing setting.
– Activity
The system displays the current activity category for the activity, as
well as its status.
– Financial transaction
The system displays the processing category, status, active activity,
release status, creator, and last-changed-by information for the finan-
cial transaction. It also provides you with the option of navigating to
status management.
– Status management
Transaction management is linked to general status management (see
Section 3.6). This is where you are provided with information on the
status. You can also see which business activities are possible for the
financial transaction.
» Tab pages for the financial object
The tab pages for the financial object are used only for OTC transac-
tions. For standardized financial transactions, the corresponding data is
created in the background for external positions.
For active financial object integration, a separate tab page is displayed
for the following financial object components: Analysis Param. and
© 2024 by Rheinwerk Publishing Inc., Boston (MA)
Financial Transaction
25
1
Default risk limit. You can use these to maintain the corresponding
data of the financial object that corresponds to the financial transaction.
1.4 Flows
A flow is the transfer of an amount between different accounts on a spe-
cific date. This transfer can be made between business partners, as well as
internally. All flows together represent the cash flow and are displayed on
the Cash flow tab page.
By default, a filter is set on the Cash flow tab page so that it displays only
structure flows that describe the financial transaction. If this filter is not
set, it is possible to view all flows. These flows are roughly classified into
four categories:
» Structure flows
» Transfer posting flows
»Valuation flows
»Accrual/deferral flows
Transfer posting flows, valuation flows, and accrual/deferral flows are no
longer used in transaction management. However, they are used in posi-
tion management because they occur when you manage a position. Due
to legacy data transfers, these flows may still exist for some financial
transactions in transaction management.
Up to Release Enterprise 1.10, the option premium could be set in the
financial transaction being exercised. This was due to the Customizing
settings associated with exercising OTC options. Furthermore, up to
Release Enterprise 1.10, valuation was performed in transaction manage-
ment, and valuation flows were also created there. Furthermore, since
SAP ERP 6.0, Enhancement Package 3, the accrual/deferral flows that
occur during an accrual/deferral are contained in position management.
Personal Copy for Jennifer Ogbonna, jennyogbonna2@gmail.com
Financial Transaction
26
1
By contrast, structure flows represent a description of the financial trans-
action. Let’s discuss some structure flows in greater detail, namely main
flows, other flows, and derived flows.
In order to categorize structure flows, you must maintain the flow types
in Customizing and assign them to the transaction type. For example, you
can define flow types for money market under Treasury and Risk
Management � Transaction Manager � Money Market � Transaction
Management � Flow Types � Define Flow Types. For main flows, you
require the Principal increase or Principal decrease flow category. For other
flows, you require the Other flow/condition flow category. You must then
assign the flow type to the transaction type under Treasury and Risk
Management � Transaction Manager � Money Market � Transaction
Management � Flow Types � Assign Flow Types to Transaction Type.
Assigning a Condition-Based Flow Type to a Transaction Type
It is not necessary to assign flow types to flows created from conditions. This
is already done implicitly via the condition type.
Main Flows
The main flows contain the amount-based structure of a financial transac-
tion. Therefore, they are also called changes in capital structure or changes
in nominal value. There are flows for both increasing and decreasing the
amount-based structure of a financial transaction.
If a financial instrument has main flows, you will see them on the Struc-
ture tab page. The tab displays the first main flow (chronologically). You
can enter or change the amount, currency, and (to a certain extent) flow
type.
An example of this is provided in Figure 8, wherein a fixed-term deposit
of 100,000 EUR is invested on 04/26/2012 for a period of one year at 4%.
The data is entered in the Investment screen area of the Structure tab
page.
© 2024 by Rheinwerk Publishing Inc., Boston (MA)
Financial Transaction
27
1
Figure 8 Main Flow on the Structure Tab Page
You can choose the Other changes in capital structure icon to nav-
igate to the overview screen for main flows. This is where you can enter
more main flows. The Other changes in capital structure icon on
the Structure tab page changes color if other main flows already exist in
the financial transaction.
On the overview screen, you can select a flow type stored in Customizing.
After entering the payment amount, currency, and payment date, you can
also define a different calculation date for some financial instruments.
Main Flow for Fixed-Term Deposits
For the fixed-term deposit financial instrument, the main flow entered on
the Structure tab page is not displayed on the overview screen. Rather, you
can view it only using the Detail button in Figure 8.
For the fixed-term deposit we have created, the capital amount increases
by 25,000 EUR to 125,000 EUR on 10/26/2012. The data to be entered is
shown in Figure 9.
From the overview screen, you can double-click the corresponding row
or choose the Details icon to navigate to the detail screen. This dis-
plays more information on the main flow (see Figure 10).
If the payment currency is not the local currency, an additional screen
area is displayed. Here, you can specify a fixed rate or fixed amount, or
the use of a current rate from the rate table.
Personal Copy for Jennifer Ogbonna, jennyogbonna2@gmail.com
Financial Transaction
28
1
Figure 9 Overview Screen for Main Flows
Figure 10 Detail Screen for a Main Flow
Early Repayment
In addition to nominal interest calculations, accrued interest calculations are
also supported. You can specify this when you define the flow type for the
nominal flow. If a change in nominal value occurs, you can then specify the
clean price (nominal amount without interest) or the dirty price (nominal
amount including interest). Within a financial transaction, it is not possible
to specify a nominal flow with an accrued interest calculation and nominal
interest calculation simultaneously.
© 2024 by RheinwerkPublishing Inc., Boston (MA)
Financial Transaction
29
1
Other Flows
You can use other flows to map flows other than nominal, interest, or
repayment. These could be charges or taxes, for instance. There is a sepa-
rate tab page for other flows, which includes an overview screen of other
flows that exist. This is where you can enter the side (party), direction,
flow type, amount, currency, and payment date.
For our fixed-term deposit, an acquisition fee of 300 EUR needs to be
paid at the start of the term on 04/26/2012 (see Figure 11).
Figure 11 Other flows Tab Page
From the Other flows tab page, you can double-click or choose the
Details icon to navigate to the detail screen. This is where you can
enter further calculation details. The acquisition fee in is relevant for
accrual/deferral for the entire term from 04/26/2012 to 04/26/2013. This
is shown in the detail screen in Figure 12.
Personal Copy for Jennifer Ogbonna, jennyogbonna2@gmail.com
Financial Transaction
30
1
Figure 12 Detail Screen for Other Flow
Derived Flows
Derived flows are flows that are calculated from other flows. This could,
for example, be the trader's commission on a stock sale or the stock
exchange tax.
Similar to other flows, derived flows also belong to the Other flow/condi-
tion flow category. To create these flows, define rules in Customizing
under Treasury and Risk Management � Transaction Manager �
Money Market � Transaction Management � Flow Types � Derived
Flows � Define Derivation Procedures and Rules. These rules deter-
mine the flow type from which the flows are derived and the structure
they have.
For the business partner in the Counterparty role, you must also make
additional settings in the corresponding company code in business part-
ner administration (Transaction BP). Therefore, on the SI: Derived Flows
© 2024 by Rheinwerk Publishing Inc., Boston (MA)
Financial Transaction
31
1
tab page, you assign the relevant derivation procedure to the product
type.
Displaying Derived Flows
Even if derived flows belong to other flows, they are not displayed on the
Other flows tab page on the screens for creating or processing financial
transactions. Rather, they can be seen only on the Cash flow tab page. They
can also be changed there.
Derived flows can be used to pay a tax on interest to be capitalized. This
tax can then be taken into account when calculating the nominal amount.
You can use the BAdI FTR_TR_FIMA_CALLBACK to implement individually
defined net interest capitalization.
Aggregated Derived Flows
If a financial transaction contains several flows with the same payment date,
but only one flow is to be posted, you can create a corresponding derived
flow by choosing the Sum Of incoming flows option in the Calculation by
setting in Customizing for defining the derivation rule. This function is intro-
duced and described in more detail in SAP Note 1703542.
1.5 Conditions
Conditions are unique calculation rules for flows, and they are used for
flows that recur on a regular basis. The amount-based structure of such
flows depends on the amount of capital. A condition category is a catego-
rization of conditions. The condition categories include interest, repay-
ment, and, for some financial instruments, premiums.
You cannot define two parallel conditions for a condition category. That is
why every condition has a valid-from date. A condition is valid until there
is a new condition with the same condition category and a more up-to-
date valid-from date (i.e., a subsequent condition). This makes it possible,
Personal Copy for Jennifer Ogbonna, jennyogbonna2@gmail.com
Financial Transaction
32
1
for example, to express a changed interest rate with a subsequent condi-
tion.
The valid-from date also has an inclusive indicator. However, this is not
visible on screen. Rather, it is determined from the inclusive indicator for
the start of the term or for the previous interest period. In this way, it is
possible for you to specify the valid-from date as 04/26/2012, which is
assumed to be exclusive, and therefore the interest period does not start
until 04/27/2012.
Conditions are also used in other areas (e.g., loans). Therefore, a flow cal-
culation based on conditions is applied generally in financial mathematics
(FIMA).
If a financial instrument has conditions, you will see them on the Struc-
ture tab page. For some condition categories, this tab page provides
information on the first condition (chronologically). The condition cate-
gories for which the system provides information differ from one finan-
cial instrument to another.
You can use the Condition button in the menu bar or follow the menu to
navigate to an overview screen of all conditions for the financial transac-
tion (see Figure 13).
Figure 13 Overview Screen for Conditions
You can double-click a row or choose the Details icon to go to the
detail screen. Alternatively, the Structure tab page provides a Details
button next to the information on the first condition of a condition cate-
gory that allows you to navigate directly to the detail screen. The detail
screen, in turn, allows you to navigate to possible subsequent conditions
or previous conditions, or to create subsequent conditions.
© 2024 by Rheinwerk Publishing Inc., Boston (MA)
Financial Transaction
33
1
You must define the condition types in Customizing (e.g., for the money
market) under Treasury and Risk Management � Transaction Manager �
Money Market � Transaction Management � Condition Types � Define
Condition Types and then assign them to the transaction type. When
defining the condition type, you specify which flow type is to be created.
You no longer need to assign this flow type to the transaction type. This is
done implicitly via the condition type.
Interest Condition
On the detail screen for the interest condition, you can select the required
condition type from all the condition types for nominal interest rates and
interest capitalization, which have been assigned to the financial instru-
ment.
In the Interest structure screen area, you must specify the interest cal-
culation method, type of interest calculation, and form of interest clear-
ing. There are also three different types of interest structure, although all
three types are not available for every financial instrument.
» The first type of interest structure is fixed amount. The amount has to be
entered here. Because the first and last periods can be shortened, you
must specify whether the fixed amount is to be included in full, propor-
tionately, or not at all in these periods.
» The second interest structure, fixed interest, requires a percentage that
specifies the fixed level of interest. By specifying a payment rate, you
can specify how much of the calculated interest is actually paid.
» The third type of interest structure is variable interest. Here, you specify
a reference interest rate with a possible spread. If this is not sufficient,
you can even create an entire formula for calculating the amount of
interest. Some predefined formulas are provided for this. If necessary,
you can change these in the formula editor to create your own formulas
Personal Copy for Jennifer Ogbonna, jennyogbonna2@gmail.com
Financial Transaction
34
1
(see SAP Note 594637). Condition formulas such as those below are
also possible:
IF <logical expression> THEN <arithmetic formula> ELSE <arithmetic for-
mula>
You can also enter a different payment rate for variable interest.
You need two recurring date sequences for an interest condition—one for
the end of interest period and one for the due date (see Figure 15, End of
interest period and Due date screen areas). The update method deter-
mines how these recurring date sequences are calculated (Update screen
area in Figure 15).
The Regular update method makes it possible to specify both recurring
date sequences independently, each by specifying the first date and a
shared frequency. For the Adjusted and Unadjusted update methods,both recurring date sequences are specified relative to one another. For
Adjusted, a frequency is specified for one recurring date sequence, while
the other recurring date sequence is relative according to the working-day
date shift. This is identical for Unadjusted, except that the relative entry
is made before the working-day date shift. The Standard radio button is
used to define that the end of the interest period is calculated relative to
the due date. Conversely, the Special radio button causes the due date to
be calculated relative to the end of the interest period (see Figure 15).
The other update methods are self-explanatory, either due to their names
or the explanations already provided for methods.
Date Preview
On the detail screen, you can use the Date preview button in the menu bar
to see what date information will be calculated by the settings made for
recurring date sequences.
Let's use the example of creating an interest rate instrument of 100,000
EUR, starting on 04/26/2012, for one year. Variable interest will be
applied at 1.5 times the reference interest rate of EUR_03_J_M minus 1%.
© 2024 by Rheinwerk Publishing Inc., Boston (MA)
Financial Transaction
35
1
Interest is due every three months, and the end of the interest period is
supposed to be one day before the due date (see Figure 14).
Figure 14 Data Screen for the Interest Rate Instrument
You can use the Details button in the Interest structure screen area
to navigate to the detail screen for the interest condition, where you can
make additional entries (see Figure 15).
Personal Copy for Jennifer Ogbonna, jennyogbonna2@gmail.com
Financial Transaction
36
1
Figure 15 Detail Screen for the Interest Condition
The interest structure described in this example can be achieved only
using a formula. You can use the Formula button shown in to select exist-
ing formulas. The standard version includes the formulas V1 * V2 + V3
and V1 * V2 + V3 * V4. After choosing the required formula, you must
navigate to the screen for entering the formula values (see Figure 16).
© 2024 by Rheinwerk Publishing Inc., Boston (MA)
Financial Transaction
37
1
Figure 16 Detail Screen for the Formula
Interest Rate-Adjustment Condition
An interest rate-adjustment condition specifies when the interest rate is
defined for a reference interest rate (interest fixing) and when this interest
rate becomes valid for the financial transaction (interest rate adjustment).
Of course, interest rate-adjustment conditions are needed only for trans-
actions with variable interest rates. These include interest rate instru-
ments that have variable interest as the interest structure, as well as all
OTC interest derivatives and the total return swap.
The interest rate adjustment-condition comprises two recurring date
sequences: one for interest rate adjustment and one for interest fixing. In
the case of interest fixing, absolute specifications by means of the Regu-
lar update rule and relative specifications by means of the Relative
update rule are possible for a reference date.
Personal Copy for Jennifer Ogbonna, jennyogbonna2@gmail.com
Financial Transaction
38
1
In our sample interest rate instrument, we want the interest rate adjust-
ment for the reference interest rate EUR_03_J_M to take place at the start
of the period, but we want interest fixing to happen two days before (see
Figure 17).
Figure 17 Detail Screen for Interest Rate Adjustment
Capitalized Interest Payment Condition
For interest capitalization, the interest is added to the capital that is
reduced again during repayment. The capitalized interest is paid back by
the last repayment, at the latest.
With OTC interest derivatives, the capital often isn't exchanged at all, but
merely serves as a basis for calculation. In this case, the repayments are
not relevant for payment, either. Nevertheless, to facilitate interest capi-
talization, the Capitalized Interest Payment condition category was imple-
mented especially for OTC interest derivatives. If you use this condition
category, the capitalized interest is still assigned to the capital and is not
relevant for posting. However, it is not reduced with repayment, but via
the new condition category, which has a posting-relevant flow. This
means that it is also possible to pay back capitalized interest during the
term.
For the purposes of this example, we want to create an EONIA swap that
represents a special case of a compound swap. The term runs from 04/26/
2012 to 05/26/2012. On the incoming side, there is a fixed interest rate of
© 2024 by Rheinwerk Publishing Inc., Boston (MA)
Financial Transaction
39
1
4% for 100,000 EUR, which is paid at the end of the term. On the outgo-
ing side, the same amount has variable interest via the EONIA reference
interest rate, which is also paid at the end of the term, but which is sub-
ject to a daily interest rate adjustment. On weekends, the interest rate for
Friday is used. The detail screen for the outgoing interest is shown in Fig-
ure 18.
Figure 18 Detail Screen for the Interest Condition
Personal Copy for Jennifer Ogbonna, jennyogbonna2@gmail.com
Financial Transaction
40
1
After entering a condition type for which interest capitalization settings
are made in Customizing, another button is provided on the Structure
tab page, allowing you to navigate to the detail screen for the capitalized
interest payment. The interest for the EONIA swap is calculated from an
average value rounded to four decimal places (see Figure 19, Calcula-
tion screen area).
Figure 19 Detail Screen for the Capitalized Interest Payment Condition
Premium Condition
For the cap and floor financial instruments, the premium is mapped as a
condition. For these two financial instruments, there is either a one-time
premium payment or a recurring premium for every hedging period.
We can use the creation of a cap as an example. The term is from 04/26/
2012 to 04/26/2013 with a nominal amount of 100,000 EUR. The refer-
ence interest rate EUR_03_J_M is hedged with a three-month period with
an upper limit of 4%. A premium of 200 EUR is paid at every period start.
The detail screen for the premium is shown in Figure 20.
© 2024 by Rheinwerk Publishing Inc., Boston (MA)
Financial Transaction
41
1
Repayment Condition
Repayments are used to reduce the capital for a financial transaction.
Most financial instruments use final repayment upon which the entire
capital is repaid at the end of the term. The interest rate instrument also
uses installment repayments, where a fixed amount is repaid at regular
intervals. Furthermore, the interest rate instrument uses annuity repay-
ments, in which a repayment of an amount that always comes to the same
total when added to the interest amount is made at regular intervals.
Figure 20 Detail Screen for the Premium
On the detail screen for the final repayment, you can change only the
flow type and, for some financial instruments, the payment date. For
installment repayments and annuity repayments, the entire capital is paid
back at the end of the term. If the capital has been repaid in full before the
end of the term, the amount of the last installment is adjusted to the
remaining capital.
For the purposes of this example, let's use the creation of an interest rate
instrument of 100,000 EUR on 04/26/2012 for one year. Fixed interest of
4% is applied and must be paid at the end of the term. Also, the nominal
amount is repaid monthly at 5,000 EUR (see Figure 21).
Personal Copy for Jennifer Ogbonna, jennyogbonna2@gmail.com
Financial Transaction
42
1
Figure 21 Detail Screen for Repayment
Price Compensation Condition
The change in the market price for an underlying security is regularly paid
for a total return swap. As with the interest condition, you must also
define two recurring date sequences here—one for the end of the interest
period and one for the due date. This has already been described in detail
for the interest condition (see the subsection"Interest Condition" at the
start of Section 1.5).
1.6 Underlying
The structure of the OTC option financial instrument consists of informa-
tion on the exercise, premium, and underlying transaction. The Euro-
pean and US exercise types are both supported. In Customizing for the
product type of the OTC option, you must specify the product type and
© 2024 by Rheinwerk Publishing Inc., Boston (MA)
Financial Transaction
43
1
transaction type for the underlying. You then see the corresponding
information in the Underlying screen area (see, for example, Figure 22).
If you choose the value Cash settlement in the Settlement field, a pay-
ment equal to the value of the underlying is made when the OTC option
is exercised. If, however, you choose the Physical exercise value, the
underlying becomes a financial transaction when the OTC option is exer-
cised. The underlying is mapped on its own Underlying tab page, which
is similar to the Structure tab page for the corresponding financial
instrument.
An example of an underlying is the completion of a currency option on
04/26/2012, with a European exercise deadline of one month, and a pre-
mium of 1,000 EUR, on 04/26/2012 (see Figure 22).
Figure 22 Data Screen for Currency Option
Personal Copy for Jennifer Ogbonna, jennyogbonna2@gmail.com
Financial Transaction
44
1
The example is based on a forward-exchange transaction for the exchange
of 100,000 EUR into USD on 07/26/2012 at a rate of 1.3 (see Figure 23).
Figure 23 Underlying Tab Page
This tab page is similar to the Structure tab page for a foreign exchange
transaction displayed in Figure 2. Because the header of the data screen
contains the currency option data, however, the general data for the
underlying is displayed in a separate Underlying screen area on the
Structure tab. It is also not possible to perform cash settlement for the
foreign exchange transaction, because it exists only as an underlying.
© 2024 by Rheinwerk Publishing Inc., Boston (MA)
Financial Transaction
45
1
1.7 Listed Financial Instruments
Listed financial instruments include securities, repos, futures, and listed
options. The structure features for these financial instruments are stored
in their class master data (see Section 2). A class is uniquely identified by
its security ID number (SID), which you must specify in the entry screen
when creating the financial transaction. For this reason, when entering
data on the Structure tab page on the data screen for creating a financial
transaction, you need to enter only the price or rate, quantity, date, and
position affected, and specify the securities account or futures account.
Further, trading data can be entered on the Trading data tab page.
An example of this is the purchase of 100 shares of SAP stock, with secu-
rity ID number 716460, at a rate of 50.00 EUR, on 04/26/2012. They will
be assigned to the securities account DEPOT4711 (see Figure 24).
Figure 24 Data Screen for a Security Transaction
Personal Copy for Jennifer Ogbonna, jennyogbonna2@gmail.com
Financial Transaction
46
1
1.8 Field Selection
The fields on the data screen for transaction creation and transaction pro-
cessing are pre-assigned. Because the data screen is used in different situ-
ations, however, it is important to be able to influence its appearance
based on its application. For example, after posting a flow, the fields of
the corresponding condition are only displayed and can no longer be
changed.
In Customizing (under Treasury and Risk Management � Transaction
Manager � General Settings � Transaction Management � Define Field
Selection), you can influence the display attributes for a field by setting a
tab page, field group, or individual field to Hide, Required entry,
Optional entry, or Display. If conflicts arise between the application and
the settings made by the user, the pre-assigned application settings will
override the user settings.
If, for example, you are working with an OTC interest rate swap with
product type 62A and company code 0001, and you want to define that
only fixed interest on the outgoing side can be swapped for variable inter-
est on the incoming side, you can create a corresponding field selection
and assign it to the product type. To do this, proceed as follows:
1. In Customizing under Treasury and Risk Management � Transaction
Manager � General Settings � Transaction Management � Define
Field Selection, double-click Field selection definition.
2. To create a new field selection, choose the New Entries button and
assign the name (SWAP_PAYER) and product category (620). After dou-
ble-clicking the row, set field groups 862 and 865 to Required entry
and set field groups 863, 864, and 866 to Hide. Then save your entries.
3. The system returns you to the starting point in Customizing, namely
Define Field Selection. Double-click Assignment to product types
and company codes and choose the New Entries button to make a
new entry with product type 62A, company code 0001, and field selec-
tion SWAP_PAYER.
© 2024 by Rheinwerk Publishing Inc., Boston (MA)
Financial Transaction
47
1
You can use the same method to set all fields for the Settlement activity
to Hide, for example.
Finding an Active Field Selection
To see whether a field selection is active in the data screen during transac-
tion creation, enter "FMOD" into the OKCODE field and press (Enter). A
message is displayed in the status bar, specifying whether, and, if so, which
field selection bar is active for the financial transaction.
1.9 Activities
A financial transaction has different status values as it passes through dif-
ferent trading or back-office processing functions. Activities are used to
reflect and represent these clearly. A new activity is created as soon as a
new status is reached. At any given point in time, there is only one active
activity. During an activity transition, the previous activity is set to
Replaced and the new activity is activated. One exception to this rule is
interest rate adjustment (see Section 3.1).
Table 6 shows the possible activity types.
Activity Type Financial Instrument
Contract All
Contract Settlement All
Order Securities, foreign exchange, OTC interest 
derivatives, futures, listed options, OTC options, 
and forwards
Order Expiration Securities, foreign exchange, OTC interest 
derivatives, futures, listed options, OTC options, 
and forwards
Fixing Foreign exchange
Table 6 Activity Types for Financial Instruments
Personal Copy for Jennifer Ogbonna, jennyogbonna2@gmail.com
Financial Transaction
48
1
Termination Deposits at notice, commercial paper, OTC inter-
est derivatives, total return swaps, OTC options, 
securities lending, forwards, and commodity 
swaps
Termination Settlement Deposits at notice, commercial paper, OTC inter-
est derivatives, total return swaps, OTC options, 
securities lending, forwards, and commodity 
swaps
Rollover Fixed-term deposits, deposits at notice, forward 
securities transactions, and securities lending
Rollover Settlement Fixed-term deposits, deposits at notice, forward 
securities transactions, and securities lending
Knock-In OTC options
Knock-In Settlement OTC options
Knock-Out OTC options
Knock-Out Settlement OTC options
Exercise Forward securities transactions, OTC options, and 
forward loans
Exercise Settlement OTC options
Expiration OTC options
Expiration Settlement OTC options
Offer Fixed-term deposits, deposits at notice, 
commercial paper, and foreign exchange
Simulation Fixed-term deposits, deposits at notice, 
commercial paper, and foreign exchange
Due Date Repos
Forward Fixing Forward
Forward Fixing Settlement Forward
Advance Maturity Forward securities transactions
Advance Settlement Forward securities transactions
Activity Type Financial Instrument
Table 6 Activity Types for Financial Instruments (Cont.)
© 2024 by Rheinwerk Publishing Inc., Boston (MA)
Trading
49
2
In Customizing, you must specify a processing category when defining the
transactiontype. This defines the possible activities and their sequence. If
the possible processing categories for a financial instrument are stored in
the system, then the sequence of Order, Contract, and Give Notice is pos-
sible, for example. Because of the large number of possible activities, OTC
options also have a lot of different processing categories. You can use the
processing categories to specify the specific processes you are using.
History
You can use the History trading function (see Section 3.2) to display not
only the current activity for every single financial transaction, but also all
previous activities.
 
2 Trading
In transaction management, trading begins with the preparation of finan-
cial transactions that can be followed by a trading decision.
A trading decision leads to a trading function, which leads to the creation
of transactions or the exercising of rights.
Corporate Action Total return swaps and forward securities transac-
tions
Dividend Adjustment Total return swaps and forward securities transac-
tions
Deal Adjustment Fiduciary deposits
Deal AdjustmentSettlement Fiduciary deposits
Deal Correction Fiduciary deposits
Deal CorrectionSettlement Fiduciary deposits
Activity Type Financial Instrument
Table 6 Activity Types for Financial Instruments (Cont.)
Personal Copy for Jennifer Ogbonna, jennyogbonna2@gmail.com
Trading
50
2
To prepare financial transactions for the fixed-term deposit and foreign
exchange financial instruments, you can solicit offers and perform simu-
lations. You also have a range of tools you can use on all financial instru-
ments to help you to make the right trading decision.
With a trading decision, you can reach an agreement with your business
partner on a new financial transaction or a change to an existing transac-
tion. To implement the trading decision, you must perform a trading
function. You can do this using the creating and processing a financial
transaction processes described in Section 1.2.
Exercising Rights
In the past, the exercising of rights was a type of trading function in transac-
tion management. However, with the introduction of position management
and its division into external and internal position management, the next
logical step was to move the exercising of rights to external position mana-
gement.
2.1 Preparation
For the fixed-term deposit and foreign exchange financial instruments,
you can prepare financial transactions by soliciting and managing offers,
as well as performing simulations.
Offer
If you have solicited an offer for a fixed-term deposit or foreign exchange
financial instrument, you can create this offer in the system using the Cre-
ate Offer transaction (TMCA). For a business partner, enter the interest
rate for fixed-term deposits (see Figure 25), and for foreign exchange
transactions, enter the exchange rate, spot rate, and swap rate. The offers
entered are sorted according to quality.
© 2024 by Rheinwerk Publishing Inc., Boston (MA)
Trading
51
2
Figure 25 Creating an Offer in Transaction TMCA
In SAP Treasury and Risk Management, an offer is created as a financial
transaction within a special number range reserved for offers. When you
execute an offer, a financial transaction with the Contract activity is cre-
ated in the normal number range. All offers, as well as a possible resulting
financial transaction, are linked together by means of a reference.
Offer in Reporting
If you want to restrict selections to offers in the Reporting section of transac-
tion management, you must enter the value "4" in the Active status field.
Simulation
For analyses and evaluations in market risk management, you can create
simulated or fictitious financial transactions for fixed-term deposits and
foreign exchange transactions in the Create Simulation transaction
(TMSA). Compared to creating a financial transaction, you have only a
Personal Copy for Jennifer Ogbonna, jennyogbonna2@gmail.com
Trading
52
2
limited choice of input fields here (see Figure 26). For example, it is not
possible to enter a business partner. After saving the data, you can dis-
play, change, execute, or delete a simulation.
Figure 26 Creating a Simulation in Transaction TMSA
A simulation is also created as a financial transaction within a special
number range reserved for simulations. Executing a simulation creates a
real financial transaction. This transaction is in the Contract activity, and
it is within the normal number range.
Simulation in Reporting
If you want to restrict selections to simulations in the Reporting section of
transaction management, you must enter the value "5" in the Active status
field.
© 2024 by Rheinwerk Publishing Inc., Boston (MA)
Trading
53
2
2.2 Decision-Making Tools
The following decision-making tools are available to assist you in making
the right trading decisions:
» Cross-rate calculator
When creating a financial transaction for the foreign exchange financial
instrument, you navigate from the data screen to the cross-rate calcula-
tor dialog box by choosing the Cross-rate calculator button or using
the Extras � Cross-rates menu path. This is where you can enter the
rate for the purchase currency and sales currency to the local currency.
The calculator then uses this information to calculate the rate between
the purchase currency and the sales currency.
»Option price calculator
In the Calculation of Option Premiums transaction (TXAK), you can use
the option price calculator to perform premium and market calculations
for the OTC option financial instrument. If yield curves are maintained,
you can perform up-to-date market data, interest, swap, or premium
calculations. Furthermore, you can define the volatility behind the cal-
culation of a known option premium. You can determine the sensitivi-
ties of one or all premiums and display the sensitivities, market data,
and premiums.
»Net present value calculator for commercial paper
In the Commercial Paper: NPV Calculator transaction (TM30), you can
use the information on the term and the capital, as well as the alterna-
tive information on the exchange rate and the interest rate, to deter-
mine the following information for the commercial paper financial
instrument: payment amount, interest amount, interest rate, exchange
rate, and number of days.
» Limit checks
You can use the Change Transaction Authorization for Traders transac-
tion (TBT1) to restrict authorization for a trader at the contract-type,
product-category, product-type, and transaction-type levels so that the
trader can close financial transactions up to only a certain volume.
Personal Copy for Jennifer Ogbonna, jennyogbonna2@gmail.com
Trading
54
2
Authorizations at higher levels automatically encompass authorizations
at lower levels. You can find Transaction TBT1 in the menu under Trea-
sury and Risk Management � Transaction Manager � Utilities.
»Date checks
You can use the Check Dates Against Calendar transaction (TM22) to
check dates before agreeing on a financial transaction. This transaction
allows you to check two calendars to see whether a date is a business
day and to see the day of the week on which the date falls. If the date
is not a business day, the previous and following business days are dis-
played.
When making your trading decision, you can also use the operative
reporting options described in Section 4.2 to get an overview of existing
financial transactions.
2.3 Trading Functions
Trading functions are used to implement trading decisions. You can there-
fore use trading functions to process a financial transaction in its current
activity status or to create a new activity for this transaction. Because a
financial transaction can only ever have one active activity, the previous
activity is replaced, and the new activity is activated in the event of an
activity transition.
When creating a financial transaction in Transaction FTR_CREATE, the
Create trading function is used. When processing a financial transaction
in TransactionFTR_EDIT, this transaction contains buttons to represent
the various possible trading functions (see Figure 4). We describe these
trading functions below.
You use the Create function to create a financial transaction with the
required Contract, Order or Fixing activity. Transaction creation is
described in greater detail in Section 3.5. You use the Change function to
change the data for the active activity of a financial transaction. In the case
of the Create and Change functions, the system performs checks to
© 2024 by Rheinwerk Publishing Inc., Boston (MA)
Trading
55
2
confirm the consistency of your entries. You use the Display function to
display all of the data from the active activity of a financial transaction.
You use the Reverse function to reverse the active activity for a financial
transaction. This reactivates the previous activity. If there is no previous
activity, the financial transaction is set to Inactive with active status "3". If
flows have already been posted in the activity you want to reverse, they
are reversed after the user has been issued an appropriate warning mes-
sage. They are assigned the To be reversed status so that position manage-
ment can reset the posting.
Reversal Cannot Be Undone
It is not possible to undo a reversal. If you perform a reversal accidentally,
you must create the reversed activity again.
You use the History function to display the activities for a financial trans-
action with its current status. You can double-click to navigate to the rel-
evant activity. The system then displays data as it was when the activity
was active.
An Exact Historical Reconstruction Is Not Possible
This historical reconstruction of data is not always possible, however. For
example, to terminate OTC interest derivatives, you must use the interest
condition either from the Contract activity or from the Settlement activity,
depending on the processing category. If the interest condition changes after
the termination, the history for the activity will also use the changed interest
condition when displaying the Contract or Settlement activities.
You use the Give Notice function to effect an activity transition to the
Termination activity. When doing this, you can create other flows to
map settlement payments, for example. The termination has different
effects, depending on the financial instrument:
»Usually, only flows with a calculation date before the date of notice are
retained and displayed in the cash flow. All other flows are blocked.
Personal Copy for Jennifer Ogbonna, jennyogbonna2@gmail.com
Trading
56
2
» For the deposit at notice financial instrument, the otherwise endless cash
flow is cut off on the date of notice, and only flows with a calculation
date before the date of notice are created.
» For OTC interest derivatives, it is also possible to shift the final repay-
ment back to the date of notice.
»OTC options are written off by the termination. In other words, before
the exercise date is reached, you forego exercising the right. The pay-
ments required to reflect this are created as other flows.
» In the case of securities, bonds can be terminated. In this case, the repay-
ment is brought forward to the date of notice, and the entire bond, or
a part of it, is paid back at a rate to be defined.
Rollover of the fixed-term deposit, deposit at notice, securities lending,
and forward securities transaction financial instruments creates an activ-
ity transition to the Rollover activity. The end of the term is moved
forward to a point in the future, and it is also possible to set a change in
capital or make other structure changes.
Rollover of the foreign exchange financial instrument creates two new
individual financial transactions. The first financial transaction uses con-
tradictory conditions to even up parts or all of the original transaction,
while the second financial transaction contains the original data as default
values. You can adjust this data and, in particular, redefine the exchange
rate and determine the value date that has been moved forward in rela-
tion to the original transaction. The two new transactions are connected
via the SWP (swap unit) reference. Also, the original financial transaction
and the two new transactions are connected via the PRL (rollover) refer-
ence.
In the case of the foreign exchange financial instrument, the Premature
Settlement function behaves in exactly the same way as the Rollover
function, except that the value date for the second transaction is in the
past compared to the original financial transaction. For a foreign
exchange transaction, two new individual transactions are created again.
You can also prematurely settle a part of an amount and roll over the
© 2024 by Rheinwerk Publishing Inc., Boston (MA)
Trading
57
2
other part. In the case of a total return swap, however, the date when the
units are returned and the nominal amount is repaid is brought forward,
and all flows that lie after this date are blocked. In the case of a forward-
securities transaction, it is possible only to settle parts of an amount pre-
maturely.
The Execute function causes an activity transition from the Order activ-
ity to the Contract activity. You can also change or supplement the finan-
cial transaction data here.
Mass Order Execution
You can use the Mass Order Execution transaction (FTR_MASS_EXEC) to
execute several financial transactions in the Order activity simultaneously.
As soon as a knock-in option reaches the agreed limit, the function of the
same name causes an activity transition to the Knock-In activity. You can
then exercise an OTC option or allow it to expire. When a knock-out
option reaches the agreed limit, the Knock-Out function causes an activ-
ity transition to the Knock-Out activity. You can then no longer exercise
this OTC option; you can only allow it to expire.
Even though there are differences from a business perspective, the Exer-
cise, Fixing, and Delivery trading functions have the same principle. The
financial transaction is completed and the underlying transaction is cre-
ated, or a settlement payment is created:
» You use the Exercise function to exercise an OTC option and cause an
activity transition to the Exercise activity. For OTC options with cash
settlement, the cash payment is calculated as the difference between the
strike and the market price. For OTC options with physical exercise, the
financial transaction is generated from the underlying. If working with
knock-in options, you must have first performed a knock-in before
exercising. If working with knock-out options, you must not have per-
formed a knock-out before exercising.
Personal Copy for Jennifer Ogbonna, jennyogbonna2@gmail.com
Back-Office Processing
58
3
» If a foreign exchange transaction is initially created without an
exchange rate (foreign exchange fixing transaction), you can use the
Fixing function to enter the exchange rate. With a forward, however,
the Fixing function (as with exercising an OTC option) creates the
underlying currency options.
» Forward securities transactions and forward loan purchases are uncon-
ditional financial transactions and must therefore be Delivered at the
end.
The Expiration function causes the expiration of a financial transaction in
the Order activity, or the expiration of a securities transaction, listed
option, repo, or OTC option in the Contract activity. An activity transi-
tion to the Expiration activity occurs. This activity makes it possible to
settle the transaction later, in back-office processing.
Mass Order Expiration
You can use the Mass Order Expiry transaction (FTR_MASS_ORDR_EXPIRY)
to expire several financial transactions in the Order activity simultaneously.
If a dividend is paid during the term of a forward securities transaction or
a total return swap for the security, the Adjust Dividend trading function
is used to enter this dividend into the financial transaction.
You can use the Correction function to correct existing flowsof a trust
transaction and the Adjustment function to change the market value of a
flow.
 
3 Back-Office Processing
Within transaction management, back office processing involves moni-
toring, controlling, and releasing financial transactions. SAP Treasury and
Risk Management provides various functions for back-office processing.
© 2024 by Rheinwerk Publishing Inc., Boston (MA)
Back-Office Processing
59
3
Depending on your business-process flow, you select the corresponding
functions and configure these functions in your system.
The functions performed during the term of a financial transaction are
grouped together in monitoring. These include the interest rate adjust-
ment for variable interest, foreign exchange rate fixing for foreign
exchange fixing transactions, and links to financial transactions by means
of references. Internal and external correspondence is also part of moni-
toring.
Controlling defines the sequence of activities and status values through
which a financial transaction passes. You use the processing category to
define the activity sequence and, most importantly, decide whether set-
tlement is performed for the transaction. The connection to general status
management also allows you to implement the transaction flow you want
using different status values.
Every individual activity or status can trigger a workflow. The workflow
implements an approval procedure that leads to the release of the activity
or status. All changes to the transaction are logged at the database level
with change documents.
In the next section, we describe the back-office processing functions you
can use to monitor, control, or release the financial transaction.
3.1 Interest Rate Adjustment
With variable interest, the amount of interest upon agreement of the
financial transaction is not yet known; it is merely based on a reference
interest rate or a formula using several reference interest rates. Until the
amount of interest is known, the interest rate flows are indicated as being
planned records.
In Customizing, you can make settings in relation to how these planned
records are updated in the financial transaction and in SAP Cash and
Liquidity Management. To ensure that these areas have the most up-to-
Personal Copy for Jennifer Ogbonna, jennyogbonna2@gmail.com
Back-Office Processing
60
3
date figures, we recommend that you refresh the planned records on a
regular basis. As soon as the interest rate is determined, interest rate
adjustment can be performed automatically or manually. A separate activ-
ity is created for every interest rate adjustment. As long as the interest
rate adjustment is not reversed, this interest rate adjustment activity has
the status Active. This means that there can be several activities with the
status Active for a financial transaction, but only one activity can have the
status Active and not be an interest rate adjustment.
Planned Record Update
Usually, planned records are visible in the cash flow with the best possi-
ble estimated value and then transferred to SAP Cash and Liquidity
Management. As long as the interest rate has not been adjusted, it will be
updated in the manner in which the update has been defined in Customi-
zing. For this purpose, you must configure one of the following planned
record update methods in the Settings for variable interest rates area
under Treasury and Risk Management � Transaction Manager � Gen-
eral Settings � Organization � Configure Company Code Additional
Data:
» Zero update
Interest rate flows that have not yet been adjusted receive an interest
rate of 0% and therefore the amount 0.
»Update with automatically maintained interest rates
The interest rate is the last interest rate adjusted automatically in the
system for the reference interest rate.
»Update with manually maintained interest rates
The interest rate is the last interest rate adjusted manually in the system
for the reference interest rate.
»Update with current interest rates
The interest rate used is the last interest rate adjusted in the system for
the reference interest rate, regardless of whether it was created manu-
ally or automatically.
© 2024 by Rheinwerk Publishing Inc., Boston (MA)
Back-Office Processing
61
3
»Update with automatically/manually maintained interest rates
The interest rate is the last interest rate adjusted automatically in the
system for the reference interest rate. If there is no automatically
adjusted interest rate, the last manually adjusted interest rate is used.
Planned Record Refresh
Because the current market data or interest rate adjustments change the
estimated values of other financial transactions for reference interest
rates, you should refresh the planned records for financial transactions at
regular intervals. This also ensures that the data in SAP Cash and Liquidity
Management remains as up to date as possible. A change to a calendar or
a correction within financial mathematics can also make it necessary to
adjust the planned records or entire cash flow according to these changed
framework conditions.
You refresh the planned records for an individual financial transaction
according to the planned record update method by calling a financial
transaction in change mode and saving it. If you want to refresh planned
records for several financial transactions simultaneously, you can use the
Update Planned Records transaction (TJ09), which you can also execute in
batch processing.
After you start Transaction TJ09, you access a selection screen (see Figure
27). For the Interest Rate Adjustment kind of adjustment, you make
restrictions to the company code and the fixing date up to and including
when the interest rate adjustments will be performed (General Selec-
tions screen area). You can also restrict the reference interest rates to be
adjusted and specify whether you will select all financial transactions or
single transactions (Specific Reference Interest Rates for Interest Rate
Adjustment and Specific Transactions screen areas). The SAP system
provides you with the standard selection tools when making these restric-
tions. You can use these tools to enter or exclude values and value ranges.
After execution, the system displays a log that specifies for all financial
transactions in the selection range whether and at what interest rate a
Personal Copy for Jennifer Ogbonna, jennyogbonna2@gmail.com
Back-Office Processing
62
3
planned record refresh was performed. You can navigate directly from
the log to the transaction display screen.
Figure 27 Selection Screen for Interest Rate Adjustment
© 2024 by Rheinwerk Publishing Inc., Boston (MA)
Back-Office Processing
63
3
Cash Flow Recalculation
The Money Market: Generate Cash Flow transaction (TMFM) regenerates
the cash flow for fixed-term deposits, deposits at notice, and commercial
paper. Events such as calendar changes can make it necessary to recalculate
even fixed-interest financial instruments.
Also, for deposits at notice, the cash flow is generated in advance for the
number of half years defined in Customizing under Treasury and Risk
Management � Transaction Manager � Money Market � Transaction
Management � Define Transaction Types. If the deposit at notice is not ter-
minated during this period, you can use the Deposit at Notice Cash Flow
Update transaction (TM21) to regenerate the cash flow in advance for this
period.
Manual Interest Rate Adjustment
You can use the following transactions to manually process interest rate
adjustments: Create Interest Rate Adjustment (TI10), Change Interest Rate
Adjustment (TI11), Display Interest Rate Adjustment (TI12), and Reverse
Interest Rate Adjustment (TI37). Since all these transactions use the same
screens, it is sufficient to describe only one of these transactions in detail.
After you have started Transaction TI10, use the company code and finan-
cial transaction number for the Interest Rate Adjustment kind of adjust-
ment and access the interest rate adjustment screen (see Figure28). You
can double-click the icon in the Int.fixing column to display details on
this interest rate adjustment in the Interest rate adjustment: Detail
view screen area. You can enter the interest rate for all interest rate
adjustments with the status In process.
When reversing an interest rate adjustment in Transaction TI37, select
the interest rate adjustment you want to reverse together with all subse-
quently performed interest rate adjustments.
Personal Copy for Jennifer Ogbonna, jennyogbonna2@gmail.com
Back-Office Processing
64
3
Figure 28 Manual Interest Rate Adjustment
Automatic Interest Rate Adjustment
The Automatic Interest Rate Adjustment transaction (TJ05) uses the same
selection screen (see Figure 27), log, and functions as the planned record
update. You can create several interest rate adjustments at the same time.
The requirement for this is that you have used the data feed or a file inter-
face to import market data for the reference interest rates.
You can use the Reverse Automatic Interest Rate Adjustment transaction
(TJ05_REV) to reverse only interest rate adjustments that were created
automatically. When doing this, the interest fixing date on the selection
screen is the decisive date up to which the reversal must be performed.
Update Interest Rate Adjustment
If the For reference interest rate entry option is selected as a date
update rule in the interest rate adjustment condition, interest rate adjust-
ments will be made if the market data table contains an entry (on any
© 2024 by Rheinwerk Publishing Inc., Boston (MA)
Back-Office Processing
65
3
date) during the term. Before the start of the term, there is usually no
market data for dates during the term.
You can use the Update Interest Rate Adjustment Dates transaction (TJ13)
to recalculate the interest rate adjustment dates during the term.
3.2 Price Adjustment
Just as variable interest is possible, variable prices (known as floating
prices) are also possible. The commodity swap can refer to a quotation in
relation to a commodity, while the total return swap can refer to a quota-
tion in relation to a security (which can also have variable interest at the
same time).
The price adjustment runs in the same way as or identical to the interest
rate adjustment described in Section 3.1. For the commodity and securi-
ties price adjustments, identical planned record update methods are
defined for the interest rate adjustment. For commodities, there is one
additional planned record update method: the commodity price is calcu-
lated using the commodity curve, which must also be specified.
The planned record refresh and manual/automatic price adjustments are
executed using the same transactions (TJ09, TI10, TI11, TI12, TI37, TJ05,
and TJ05_REV). For these transactions, you make a selection in the Kind
of Adjustment screen area to indicate whether the adjustment concerns
an interest-rate adjustment, commodity-price adjustment, or securities
price adjustment. Once you make your selection, the associated selection
parameters become ready for input (see Figure 27).
3.3 Exchange Rate
The financial instrument known as a foreign exchange fixing transaction
relates to a middle rate quoted on the stock exchange on a specified day.
As soon as this rate is determined, use automatic or manual fixing to enter
Personal Copy for Jennifer Ogbonna, jennyogbonna2@gmail.com
Back-Office Processing
66
3
it in the financial transaction. The fixing creates an activity transition
from the Fixing activity or the Fixing Settlement activity to the Con-
tract activity.
It is also necessary to fix the foreign exchange rates for some financial
instruments from the OTC options area. In these cases, fixing is not an
activity in itself. Rather, it is the exchange-rate entry made in the financial
transaction. The OTC option can be exercised only when all fixings have
been performed for a transaction.
Automatic Fixing Processing
Automatic fixing processing for the foreign exchange financial instrument
by means of the Automatic Fixing Processing transaction (TBCS) inserts
the middle rate with exchange rate type M from the currency table
TCURR into the financial transaction. For spreads that deviate from the
ask rate and bid rate, a markup/markdown is taken into account for the
amount of the separately stored fixing spread. The financial transaction is
then saved in the Contract activity.
The requirement for automatic fixing processing is that you have used the
data feed or a file interface to import market data for current foreign
exchange rates.
Manual Fixing
You can also use the Fixing button in the Execute Fixing Transaction
transaction (TXV5) or Process Financial Transaction transaction (FTR_
EDIT) to fix the foreign exchange financial instruments. You can use both
transactions to access a financial processing transaction data screen in
order to enter a currency rate and save the financial transaction in the
new Contract activity.
© 2024 by Rheinwerk Publishing Inc., Boston (MA)
Back-Office Processing
67
3
Average Rate Fixing
The Fix Average Rate transaction (TAV1) fixes exchange rates for the aver-
age-rate option, basket option, and correlation option financial instru-
ments. For these financial instruments, the dates by which foreign
exchange rates must be fixed are saved upon creation of the financial
transaction. The settlement amount is determined from the foreign
exchange rates when the option is exercised.
The selection screen for the transaction contains general selections for the
financial transactions. You can use the Up to and including rate date
parameter to define the date by which fixing is to be performed.
If you have set the Only exact day rates permitted indicator, the system
takes into account only rates with a date that concurs with the fixing date
for the financial transaction when determining foreign exchange rates.
The system issues an error message if no foreign exchange rate is defined
in the system for the specified date. If this indicator is not set, the system
first tries to find a to-the-day rate when determining foreign exchange
rates. If this is not possible, the system also considers rates that are in the
past from the perspective of the specified fixing date.
After you make your selections, the system displays a log with the results
and error messages.
The Reset Average Rate Fixing transaction (TAV2) resets the foreign
exchange rate fixings performed in Transaction TAV1. You can then per-
form the fixings again.
The selection screen in Transaction TAV2 is similar to the selection screen
in Transaction TAV1 (Fix Average Rate). The As of and including rate
date field specifies from which key date the fixed rates are to be deleted.
The log is structured in exactly the same way.
Personal Copy for Jennifer Ogbonna, jennyogbonna2@gmail.com
Back-Office Processing
68
3
3.4 References
A reference establishes a relationship between any numbers of financial
transactions. The reference category determines the meaning of a refer-
ence. Some references are automatically created for actions in the finan-
cial transactions, while others are created manually by the user. You can
use the following transactions to process references: Create Reference
(TBR6), Change Reference (TBR7), Display Reference (TBR8), and Reverse
Reference (TBR9).
Table 7 displays the reference categories available in the system.
Except for the mirror transaction links, you can also perform manual
changes for automatically created references. For example, after reversing
a currency option that belonged to an option spread, you could reassign
the newly created currency option manually to the other currency option.
However, such manual intervention is necessary only in exceptional
cases.
Reference Category Description Creation
BID Offer Automatic
CON SWIFT confirmation files Automatic
EUR Euro transaction currency changeover Automatic
MIR Mirror transaction links Automatic
KMP Nettings Manual
OPT Option referencederivatives Automatic
PRL Rollover of foreign exchange transactions Automatic
REF General reference Manual
SWP Foreign exchange swap Automatic
ICH Issuance contract hedge Manual
Table 7 Reference Categories
© 2024 by Rheinwerk Publishing Inc., Boston (MA)
Back-Office Processing
69
3
You can use the Collective Processing of References transaction (TBRL)
to monitor references. The result list contains the following functions for
accessing reference processing: Create, Change, Display, and Reverse.
To gain an overview of all nettings with a partner, for which money mar-
ket transactions are involved, proceed as follows: start Transaction TBRL
and select the reference category KMP and the money-market application.
Now, restrict the selection to one or more partners.
Overview of the References
In the creating a financial transaction data screen, you can gain an overview
of the references associated with a financial transaction via Environment �
Object links. Double-clicking a reference takes you to the detailed display
screen for the reference. You can navigate to the relevant financial transacti-
ons from there.
3.5 Settlement
The processing category mentioned in Section 1.9 also defines whether
there are settlement activities. For example, settlement category 00101 is
defined for product category 600 and transaction category 100 with the
activity sequence: Order – Contract – Settlement. In this way, you can
use the processing categories to exert a control function for creating a
financial transaction.
Settlement causes an activity transition from the current activity to the
corresponding settlement activity. When doing this, you can change data,
and the system checks the consistency of the data. In the central entry
transaction for processing a financial transaction (Transaction FTR_EDIT),
the settlement function is represented by the Settle button.
Mass Settlement
You can use the Mass Settlement of Financial Transactions transaction (FTR_
MASS_SETTLE) to settle several financial transactions simultaneously.
Personal Copy for Jennifer Ogbonna, jennyogbonna2@gmail.com
Back-Office Processing
70
3
3.6 Status Management
Transaction management is linked to the general status management
function. This is where the system status is defined and an assignment is
defined for which business activities are possible for a status. Because all
the transactions in transaction management represent business activities,
status management also defines how an activity can set or delete one or
more system status value. In addition, you can define the user status for
yourself, as well as configure how it is controlled. The current status and
resulting business activities are displayed on the Status tab page of the
data screen.
For fixed-term deposit 51A with transaction type 100, when the contract
is created, it should not be possible to settle the transaction until the
counter-confirmation is received. To do this, create a profile in Customi-
zing under Treasury and Risk Management � Transaction Manager �
General Settings � Transaction Management � Status Management �
Define Status Profile and assign a name to the status profile, enter some
text, and specify a maintenance language. If you double-click a row that
contains a status profile, you access the screen shown in Figure 29 and
can define the status here. You can use the Object Types button to assign
it to the money-market financial instrument.
Figure 29 Customizing Screen for Defining a Status Profile
If you double-click the user status displayed in a row, the system takes
you to the activity control screen for the status profile described as trans-
action business in Figure 30. This is where you make the settings to
© 2024 by Rheinwerk Publishing Inc., Boston (MA)
Back-Office Processing
71
3
ensure that the Settle business activity (described as a business transac-
tion in Figure 30) is forbidden by the status. Setting the status ABC is the
next action for the Create contract activity, while deleting the status is
the next action for the Confirm activity.
Figure 30 Customizing Screen for Transaction Control for a Status Profile
After saving your entries, you must assign the new status profile to the
required transaction type in Customizing under Treasury and Risk
Management � Transaction Manager � Money Market � Transaction
Management � Transaction Types � Define Transaction Types.
Correcting the Status
If the status of a financial transaction becomes inconsistent, you can use the
report RFTB_STATUSOBJECT_CREATE to restore the correct status.
3.7 Workflow
You can use a workflow to define release procedures for creating or pro-
cessing a financial transaction, and to include the release in a user's work-
list. The status management function triggers events for the business
object BUS2042 (financial transaction) and thereby sets off workflows.
For product type 51A with transaction type 100, you want to implement
a one-step release procedure for creating a contract so that another pro-
cessor must concur before the contract can be created and subsequent
Personal Copy for Jennifer Ogbonna, jennyogbonna2@gmail.com
Back-Office Processing
72
3
processes, such as settlement, can be performed. It should also be possi-
ble to process the financial transaction and, in this case, reset the release
procedure.
In Customizing, under Treasury and Risk Management � Transaction
Manager � General Settings � Transaction Management � Release �
Define Release Procedure, you can make the corresponding entry for
the product type and transaction type and set the Release procedure flag.
Select the row and double-click the Release conditions folder. You can
now create a new release (see Figure 31).
Figure 31 Customizing Screen for Defining Release Conditions
In Customizing, under Treasury and Risk Management � Transaction
Manager � General Settings � Transaction Management � Release �
Adjust/Copy Workflow Template, you should then copy the specified
rule 20000034 and workflow 20000139 and adjust them according to
your requirements.
If you have created a new workflow, you must still use the Display/Main-
tain Event Type Linkages transaction (SWETYPV) to add the new task to
the event type linkage for the business object BUS2042. This transaction is
located in the menu under Tools � ABAP Workbench � Development �
SAP Business Workflow � Definition Tools � Events � Event Linkages.
If you now create a financial transaction of this kind as a contract, a
new work item is created for approval in the worklist of the specified
processor.
© 2024 by Rheinwerk Publishing Inc., Boston (MA)
Back-Office Processing
73
3
3.8 Change Documents
The changes to every financial transaction are logged in the database and
written to change documents. You can navigate from the transaction cre-
ation data screen to the selection screen for change documents (see Figure
32) via the main menu: Environment � Change documents. Alterna-
tively, you can call the Treasury: Change Docs Transactions transaction
(TBCD) directly.
Figure 32 Selection Screen for Change Documents
You can now enter a financial transaction and other parameters. After
execution, the system issues a list of all the changes that correspond to the
selection parameters (see Figure 33).
Personal Copy for Jennifer Ogbonna, jennyogbonna2@gmail.com
Operative Reporting
74
4
Figure 33 Result Screen for Change Documents
 
4 Operative Reporting
You can use operative reporting to control dates within transaction man-
agement, check the progress of financial transactions, and gain an over-
view of existing financial transactions.
Operative reporting provides you with standard reports you can call via
transactions or parameter transactions. Parameter transactions call the
corresponding program together with a variant that fills the input fields
with pre-assigned default values. Parameter transactions often have lon-
ger transaction codes than those of transactions. For example, thetrans-
action code S_ALR_87014407 calls the Journal of Financial Transactions
transaction (TJ01), which restricts itself to money market and is pre-
assigned with the values 510 to 560 for product categories.
The report flow is always the same. First of all, you can select financial
transactions on a selection screen according to different perspectives.
After making your selections, the system displays a result list of the
selected financial transactions formatted according to your specifications.
© 2024 by Rheinwerk Publishing Inc., Boston (MA)
Operative Reporting
75
4
You can usually double-click the relevant transaction or use the Details
button to navigate from this list to the individual display screen for a
financial transaction, or to select another function for a transaction.
This section describes the most important standard reports and distin-
guishes between reports according to their function, namely controlling
and overview. The information system of Transaction Manager provides
more information on reporting and data analysis functions.
4.1 Controlling
The control function in transaction management includes dates for spe-
cific events (such as interest-rate adjustment for variable interest), as well
as the financial transaction process itself (e.g., to clarify whether corre-
spondence has been performed). The following is a selection of the most
important reports that focus on control functions.
»Alert monitor
The Financial Transaction: Alert Monitor transaction (FTR_ALERT)
combines several special control transactions. Messages are displayed
in the financial transactions in compressed format. This provides you
with a comprehensive view of the following areas: settlement, release,
payment and posting, and correspondence.
Variants
You can use variants to save dynamic date entries (e.g., "Today minus 3
days") using the shortcuts described in Section 1.1. This enables you to per-
form periodic checks very easily.
» Correspondence monitor
The Correspondence Monitor transaction (FTR_COMONI) is the main
tool in correspondence.
Personal Copy for Jennifer Ogbonna, jennyogbonna2@gmail.com
Operative Reporting
76
4
»Maturity schedule for OTC options
The Option Expiration transaction (TJ06) displays a clear overview of
OTC options and their due dates.
From the result screen, you can navigate to the transaction processing
screen for individual OTC options and execute the Display, Exercise,
or Expiration trading functions.
» Expiration/barrier check
You can use the Collective Monitoring of Options transaction (TI94) to
check the instrikes and outstrikes of currency barrier options. The sys-
tem compares the financial transaction data with the relevant rates and
proposes one of the Knock-in, Knock-out, or Expiration trading func-
tions.
» Interest rate and price adjustment schedule
The Interest Rate and Price Adjustment Schedule transaction (TJ07)
shows when interest rate adjustments, commodity price adjustments,
or securities price adjustments need to be made for the financial trans-
actions you have selected, and the status of each of these adjustments.
4.2 Overview
To meet different requirements, it is important to gain an overview of
existing financial transactions from different perspectives. The following
are the most important reports that focus on providing an overview of
financial transactions:
» Collective processing
We introduced you to collective processing in Section 1.2. Transaction
FTR_00 provides central collective processing as well as financial instru-
ment–specific collective processing. You can use collective processing
to get an overview of existing financial transactions and to navigate to
processing a financial transaction from the respective result lists.
© 2024 by Rheinwerk Publishing Inc., Boston (MA)
Operative Reporting
77
4
»Offer overview
As with collective processing, you can use the Evaluate Offers transac-
tion (TCOM) to get an overview of the offers created. You can navigate
from the result list to the offer display screen in order to obtain more
detailed information.
» Journal of financial transactions
In the Journal of Financial Transactions transaction (TJ01), financial
transactions are selected according to the selection parameters and then
issued according to the product type, transaction type, creation date,
and/or activity category. You can double-click to navigate to the indi-
vidual display screen for a financial transaction.
» Transactions with cash flows
You can use the Journal: Transactions with Cash Flows transaction
(TJ12) to display the cash flows for pre-assigned financial transactions.
Information on the activity category and the posting status of a flow are
also displayed in addition to the usual cash flow data. Further data can
be shown as required. Here, too, you can double-click to navigate to the
display screen for an individual financial transaction.
»Money market payment schedule
You can use the Payment Schedule transaction (TJ04) to obtain an over-
view of the payment-relevant flows for the financial transactions you
have selected, and their status values. The flows are sorted by payment
date. You can double-click a row to navigate to the corresponding finan-
cial transaction.
»Position monitor
You can access the position monitor via the Dealer Position transaction
(FTR_DEALPOS). This transaction lists the positions of currencies for
the key dates. You can double-click an amount to have it explained, as
the system displays the corresponding financial transactions in a list.
Double-clicking this list will display the individual financial transaction.
You can use the BAdI FTR_TR_POSMON to influence the selection and
evaluation of the data.
Personal Copy for Jennifer Ogbonna, jennyogbonna2@gmail.com
Operative Reporting
78
4
» Transaction release
Provided that the workflow has been activated in Customizing, the
Transaction Release: Work Item List transaction (TJ08) displays all
release workflows that have been triggered in SAP Treasury and Risk
Management. You can double-click a row in the result screen to display
the transaction-specific workflow log.
» Securities lending
You can use the Securities Lending, Collateral, Revenues transaction
(TSL10) to display all the financial transactions for the securities lending
financial instrument on a given key date, together with their quantity,
market price, and market value. Furthermore, all cash securities deposits
and securities collateral are displayed with their market value. The collat-
eral rate is calculated from the market value of the lent position, as well
as the market value of the securities, and is displayed as a percentage.
You can enter a time interval on the Securities lending revenues tab
page of the selection screen. The proportion that is omitted for this
time interval is calculated, and the securities lending revenues are dis-
played.
» Facility
The Line of Credit and Utilization transaction (TM_60) displays a facility
and its utilization. You can also navigate to the display screen for the
financial transaction and the display screen for the partner.
The Lines of Credit, Drawings, Fees transaction (TM_60A) is used to
calculate the commitment of lines of credit for the primary and second-
ary market, drawings, and fees key figures per facility, bank, and line of
credit. You can perform the calculation for either a key date or a time
interval. For the key date, the system does not display the drawings,
but rather the utilization of the facility.
» Securities account list
You can use the Securities Account List transaction (FWDP) to display
and print, if required, master data for the purpose of selecting a securi-
ties account. When selecting the securities account, you can use various
© 2024 by Rheinwerk Publishing Inc., Boston (MA)
Transaction Product Categories
79
5
parameters to restrict your selections (e.g., company code, securities
account type, securities account category, or portfolio).
» Class
You can use the ClassInformation transaction (FWDG) to output all the
class data to a printer. You can restrict the selection by ID number and
product type. If required, it is also possible to print the cash flow for a
bond, generated from its master data.
 
5 Transaction Product Categories
The previous sections introduced you to the principles and basics of
transaction management. We will now turn our attention to the product
categories available, which constitute the formation of the financial
instruments. These product categories use the conditions, flows, and
underlyings that have already been described. In this section, you will
learn exactly how these elements are used and in what way, as well as
about additional structure features and properties of each product cate-
gory. However, each product category will not be described in full. There-
fore, if you find that a function or property is missing below, you should
ask an SAP consultant if it is available.
5.1 Securities
Transaction management is solely concerned with the management of
financial transactions—that is, the purchase or sale of a securities on a
specific key date.
The following product categories are summarized under the term securi-
ties:
» Stock
» Investment certificate
Personal Copy for Jennifer Ogbonna, jennyogbonna2@gmail.com
Transaction Product Categories
80
5
» Subscription right
» Bond
»Drawable bond
» Bond with installment repayment
»Warrant bond
»Convertible bond
» Index warrant
» Equity warrant
»Currency warrant
» Bond warrant
» Shareholding
You can first create the purchase or sale of securities as an order. The
order book is managed in position management. This order can be exe-
cuted or expire.
The structure features are defined in the securities master data. In the
financial transaction, the securities ID number is used to make reference
to the securities master data (see Figure 24). In the Securities Acct field,
you specify the securities account used by position management to man-
age this position. This means that you have to specify only the securities
quantity and price, possibly with an exchange rate or the amount in the
local currency, for example.
The accrued interest calculation is displayed and can be suppressed for
the purchase or sale of a bond. You can use the coupon information to
influence the accrued interest. All standard scenarios relating to accrued
interest calculation are supported here. The effective interest rate is also
calculated and displayed. You can also calculate the securities price by
specifying an effective interest rate. The physical delivery of securities can
be confirmed via correspondence and displayed in the financial transac-
tion and in the position.
© 2024 by Rheinwerk Publishing Inc., Boston (MA)
Transaction Product Categories
81
5
You use the Position Value date field to control when the financial
transaction will have an effect on the position and, therefore, whether
you produce financial statements on the trade date (trade date account-
ing) or on the settlement date (settlement date accounting).
5.2 Fixed-Term Deposit
In the case of a fixed-term deposit, interest is applied to an amount at a
fixed-percentage rate for an agreed term. The following points are of par-
ticular interest here:
»Nominal amount
You can enter a premium/discount by specifying a payment amount
that differs from the nominal amount. Changes in nominal value can
occur at any time during the term of the fixed-term deposit. A pre-
mium/discount is possible even if this happens.
» Interest
You use an interest condition to enter the interest. The first interest
condition is displayed. You can enter all other subsequent conditions
on the detail screen. Interest capitalization is possible. Similarly, the
interest payment can be specified as an amount.
»Repayment
At the end of the term, the remaining nominal amount is repaid in the
form of a final repayment. A rollover moves the end of the term, thus
making it possible to change a nominal amount and enter new interest
conditions.
5.3 Deposit at Notice
In the case of a deposit at notice, interest is applied to an amount at a
fixed-percentage rate until further notice. Nominal amounts and interest
have the same scope for both deposits at notice and fixed-term deposits.
The period of notice enables you to announce the period of time between
Personal Copy for Jennifer Ogbonna, jennyogbonna2@gmail.com
Transaction Product Categories
82
5
agreeing to the termination and making it effective. In the case of a termi-
nation, the nominal amount is returned in the form of a final repayment.
In the case of deposits at notice, the cash flow is calculated only for a time
in the future, configured in Customizing. Occasionally, it is necessary to
update this information by changing the financial transaction or using the
Deposit at Notice Cash Flow Update transaction (TM21).
5.4 Commercial Paper
Commercial paper defines the nominal amount to be repaid at the end of
the term for a financial transaction and the interest rate. The purchase
value of commercial paper at the start of the term for a financial transac-
tion equates to the nominal amount less the interest. In Customizing, you
can choose whether the net present value or nominal value is the basis for
this transaction. Furthermore, the interest-rate flow can also be shown in
the cash flow or represented by a premium/discount, in the case of a
nominal flow.
You can specify either the interest rate or payment rate in the financial
transaction. The other value will then be calculated. A yield or cash dis-
count can be used to calculate the net present value. Linear discounting is
applied for terms of less than one year, while exponential discounting is
also possible for terms longer than one year.
Cash-Flow Transaction
You can use a cash-flow transaction to map any cash flow. Each flow must
be created individually. If you wish, you can enter further information on
any of the flows in the flow detail screen. The cash-flow transaction also
makes it possible to enter a premium/discount for nominal flows. At the
end of the term, the system checks whether the position is to be com-
pletely returned again.
© 2024 by Rheinwerk Publishing Inc., Boston (MA)
Transaction Product Categories
83
5
5.5 Interest-Rate Instrument
In the case of an interest-rate instrument, interest is applied to a nominal
amount within the term. The nominal amount can change during the
term. Furthermore, a premium/discount is possible.
Fixed and variable interest rates are possible. Interest can also be a speci-
fied amount. If you wish, you can use a subsequent condition to change
the interest several times during a term. Interest capitalization is possible.
A combination of interest capitalization and nominal interest rates is also
permitted.
The nominal amount can be repaid in the form of a final repayment,
annuity repayment, or installment repayments. Installments can be pre-
determined or calculated.
5.6 Facility
A facility defines lines of credit as the framework conditions for a series of
credit exposures known as drawings. The facility is entered as a separate
financial transaction within transaction management.
Drawings can vary in time and amount up to the approved line of credit
amount. A drawing is performed when one of the following financial
instruments is created and the facility is entered on the Administration
tab of the data screen during transaction creation: fixed-term deposit,
deposit at notice, cash-flow transaction, or interest-rate instrument.
A confirmed facility guarantees availability of a limited-credit total at any
time. The borrower must pay a fee for this. For an unconfirmed facility,
however, every single drawing must be agreed upon.
Facilities can also be divided into bilateral and syndicated facilities. Bilat-
eral facilities have a borrower and a lender, while syndicated facilities
have a borrower and several lenders, each with their own lines of credit.
There are mainlines of credit, which exist in parallel, as well as sub-lines
Personal Copy for Jennifer Ogbonna, jennyogbonna2@gmail.com
Transaction Product Categories
84
5
of credit, which are subordinate to main lines of credit. You must specify
which tasks the business partners can take on in connection with the facil-
ity. You do this in Customizing under Treasury and Risk Management �
Transaction Manager � Money Market � Transaction Management �
Syndicated Facility � Define Partner Rank.
In order to work with other lines of credit in addition to the main line of
credit, you must define these additional lines of credit in the Define Lines
of Credit transaction (TCL1), which you can find in the menu under Trea-
sury and Risk Management � Transaction Manager � Debt Manage-
ment � Master Data � Facility. In order to create a new line of credit in
the facility, choose Other lines on the Structure tab. If you want to add
another main line of credit, enter it in the Credit Line column. If you
want to add a new sub-line of credit, enter it in the Subline of Credit col-
umn within the row that contains the main line of credit.
You can use the Charges tab to specify charges. Depending on utilization,
for example, you can apply a different interest rate. In order to do this,
you must have defined condition types (for example, Facility fee free,
Facility fee due, Facility fee overdrawn, and Facility fee available).
On the Rules tab page, you can configure which financial instruments
are permitted as drawings. The Profiles tab page provides you with an
overview of financial transactions that have already been assigned to the
facility.
5.7 Fiduciary Deposit
A fiduciary deposit is a cash flow-based financial transaction. Only the
purchase of a fiduciary deposit is mapped; there is no mapping of the sale
of a fiduciary deposit. The depositor pays a premium and obtains a fixed
cash flow every month, which comprises the repayment and interest rate
flow. The flows can be imported from Excel and contain any number of
inflows.
© 2024 by Rheinwerk Publishing Inc., Boston (MA)
Transaction Product Categories
85
5
Collateral must be defined for the fiduciary deposit. You can enter bonds,
bonds with installment repayment, warrant bonds, or convertible bonds
on the Collateral tab page. You can then use the Correction trading
function to correct existing flows. Furthermore, you can use the Adjust-
ment trading function to remove or add flows.
5.8 Foreign Exchange Transaction
A foreign exchange transaction is the purchase or sale of one currency
against another currency on the current date (known as a spot transaction)
or at a certain time in the future (known as a forward transaction). Usually,
different transaction types are used to differentiate between spot and for-
ward transactions.
A financial transaction can be physically delivered or written off by
means of a cash settlement. In the event of a rollover or premature settle-
ment, a financial transaction is created with contradictory conditions in
order to write off the original transaction, and a second financial transac-
tion is created for the new values. In the case of a non-deliverable forward
(NDF), it is known from the outset that a cash settlement will take place
because, often, a currency cannot be listed. Here, you must perform a fix-
ing whereby the settlement amount or settlement exchange rate is
entered and the cash settlement is calculated.
A foreign exchange swap comprises two individual transactions: a spot
transaction and a forward transaction, both of which are linked to each
other via a reference of the type SWP.
5.9 Cap/Floor
A cap or floor is a series of interest rate options that are exercised when a
reference interest rate exceeds or falls short of a certain level. In addition
to entering an upper or lower limit, an interest condition can be used to
Personal Copy for Jennifer Ogbonna, jennyogbonna2@gmail.com
Transaction Product Categories
86
5
specify a series of interest rate options. Changes can be made using sub-
sequent conditions.
Since conditions can also be used to specify premiums, a single premium
is as possible as a premium for each individual interest rate option.
5.10 Interest Rate Swap
An interest rate swap is a swap transaction based on different interest
rates. Since all entries are made for each side, you can control both sides
independently. You can also enter different currencies for both sides (cur-
rency swap). During the term, the nominal amount can be changed any
number of times for both sides. These changes can be transferred to the
other side.
Conditions support both the use of nominal interest and interest capital-
ization. Fixed interest, a fixed amount, or variable interest can be entered
for both sides, while changes to interest can be made using subsequent
conditions. As with a discount swap, interest can be paid at the start of a
period. A discounted interest is therefore applied with the same rate as
the interest condition.
In the case of interest capitalization and a non-posting-relevant nominal
amount, the capitalized interest is paid during the term of the payment of
capitalized interest. The EONIA swap is a special form of such a com-
pound swap.
At the end of the term, the outstanding nominal amount is repaid in a
final repayment.
5.11 Forward Rate Agreement (FRA)
You can use a Forward Rate Agreement (FRA) to specify a fixed interest
rate that is to apply to a future period. The difference between this
amount and the market interest rate is paid at the start of the hedge
© 2024 by Rheinwerk Publishing Inc., Boston (MA)
Transaction Product Categories
87
5
period. There are no condition details. Rather, the lead time, hedge
period, and date on which the interest will be fixed are specified, as well
as the base amount, interest rate, and reference interest rate.
Two types of calculations are available here and can produce slightly dif-
ferent results. Either the FRA interest rate or the reference interest rate is
determined, and the difference of the resulting amounts is then deter-
mined and discounted accordingly. Or, both the FRA interest rate and the
reference interest rate are determined. The two associated amounts are
then discounted separately, and the difference amount is determined.
5.12 Total Return Swap
A total return swap swaps the return leg, which comprises the cash flow
for a securities position (change in market price, dividends, interest pay-
ments, etc.), for the funding leg, which comprises the cash flow for the
fixed or variable interest applied to a nominal amount. At present, only
stocks are supported as securities.
On the return leg, you specify the securities quantity and price. You also
specify the place of trading here. You use price compensation conditions
to specify the times at which the market price is determined and at which
the difference between the current and previous market price is to be
paid. You can define an anticipated dividend payment schedule on the
Dividends tab page and adjust the dividends during the term.
The funding leg contains the nominal amount and an interest condition
for nominal interest or interest capitalization. Fixed interest, a fixed
amount, or variable interest are possible interest conditions and can be
changed using subsequent conditions.
When exercising takes place at the end of the term, the price adjustment
can be made directly. If, in the event of advance maturity, a price adjust-
ment is not available by chance, this can also be created and executed
directly.
Personal Copy for Jennifer Ogbonna, jennyogbonna2@gmail.com
Transaction Product Categories
88
5
You can use the Post Corporate Action transaction (FWKB) to perform
corporate actions for a total return swap.
5.13 Future
A future is a financial transaction that has a standardized structure and is
binding for both parties. Only the purchase or sale of the future is repre-
sented in transaction management. Its position and resulting margin pay-ments are managed in position management. The structure features are
defined in the futures master data. Depending on the underlying, various
future categories are defined here:
» Securities future
» Index future
» Interest future
»Commodity future
In the financial transaction, the securities ID number is used to make ref-
erence to the master data. In the Futures Account field, you specify the
futures account used by position management to manage this position.
You therefore specify only the units, exchange rate, and market value.
You use the Position Value date field to control when the financial
transaction will have an effect on the position and, therefore, whether
you produce financial statements on the trade date (trade date account-
ing) or on the settlement date (settlement date accounting).
5.14 Repo
You can use a repo (also known as a repurchase agreement) to sell a bond,
drawable bond, warrant bond, or convertible bond on the current date at
a spot exchange rate and repurchase it again on a future date at a specified
forward rate. In the case of a reverse repo, you purchase on the current
© 2024 by Rheinwerk Publishing Inc., Boston (MA)
Transaction Product Categories
89
5
date and sell on a future date. For this purpose, you must use the securi-
ties ID number, securities account, and nominal amount to specify the
corresponding position.
In the case of repos with delivery, the securities are actually taken from
the securities account. Interest earned during the repo term is then due to
the lender. In the case of repos without delivery, the repos remain in the
securities account, and the interest earned is due to the borrower.
If interest is to be accrued, this can be determined from the forward rate.
5.15 Forward Securities Transaction
You can use a forward securities transaction to purchase or sell a certain
number of stocks, investment certificates, bonds, or shareholdings for a
particular amount on a future date. The forward rate is calculated from
the spot rate and other considerations such as interest, costs, and divi-
dends.
In the event of a sale, you can specify whether the associated position is to
be locked, or whether a check is to be performed and a warning or error
message issued, if necessary.
The forward securities transaction is adjusted when corporate actions are
posted. A dividend schedule is defined on the Dividends tab page. You
can also manually adjust dividends here. At the end of the term, the divi-
dend can be delivered as a cash settlement and also as a physical exercise.
The entire forward securities transaction or parts of the financial transac-
tion can be rolled over, or the due date can be brought forward.
5.16 Listed Option
A listed option is a financial transaction that has a standardized structure
and is binding for one party. The structure features are defined in the
Personal Copy for Jennifer Ogbonna, jennyogbonna2@gmail.com
Transaction Product Categories
90
5
securities master data. Depending on the underlying, various categories
of listed options are defined here:
» Stock option
» Stock index option
» Bond option
» Futures option
»Commodity future option
In the financial transaction, the securities ID number is used to make ref-
erence to the master data. In the Futures Account field, you specify the
futures account used by position management to manage this position.
You therefore specify only the units, exchange rate, and market value.
You use the Position Value date field to control when the financial trans-
action has an effect on the position and, therefore, whether you produce
financial statements on the trade date (trade date accounting) or on the
settlement date (settlement date accounting).
You can treat listed options as futures and generate corresponding initial,
variation, and close margins in position management.
You can use the Exercise Option Right transaction (FWER) to exercise a
listed option at the end of the term (European) or at any time (American),
or to allow a listed option to expire. In the event of a physical delivery,
the units are posted to the securities account. In the case of a cash settle-
ment, a payment is created.
5.17 OTC Option
An OTC option is a non-standardized financial transaction that is binding
for one party. An option premium is paid for this right. The following
underlyings are available for the OTC option:
» Securities
» Foreign exchange
© 2024 by Rheinwerk Publishing Inc., Boston (MA)
Transaction Product Categories
91
5
» Interest rate swap
» FRA
» Future
»OTC option
»Commodity forward
Depending on the OTC option category, one or more barriers may exist.
The following object categories are available:
» Standard
»Average Rate Option
»Down&In
»Down&Out
»Up&In
»Up&Out
»OneTouchCall
»OneTouchPut
»HitAtEndCall
»HitAtEndPut
»Double Knock Out
»Double Knock In
»Double Barrier Up&In Up&Out
»Double Barrier Down&In Down&Out
» Basket Option
» Basket Option AVG Rates
»Correlation Option
»Correlation Option Avg Rates
The OTC option can also be exercised at the end of the term (European) or
at any time (American). In the event of a physical delivery, a financial
Personal Copy for Jennifer Ogbonna, jennyogbonna2@gmail.com
Transaction Product Categories
92
5
transaction is created. In the event of a cash settlement, a corresponding
payment is created.
5.18 Securities Lending
In the system, you can enter only the lending, not the borrowing. Here,
securities are lent from the securities position and transferred to a lending
securities account.
A distinction is made between fixed-term and open-ended lending. In the
case of fixed-term lending, you enter both the start and end of the term.
This lending can be rolled over. In the case of open-ended lending, you
enter only the start of the term. The cash flow is then generated in
advance for a time that can be specified in Customizing. The end of the
term is determined by a termination. In both cases, the lending revenue is
specified as a percentage or an amount with a frequency.
5.19 Forward
A forward volatility agreement is the agreement to purchase or sell a strad-
dle. A straddle is a combination of a currency call option and a currency
put option with an identical underlying. The forward date is the date on
which the term for the options commences. The straddle's strike is speci-
fied on the forward date. When performing the fixing, both straddle
options are created as financial transactions. A termination prevents fix-
ing.
5.20 Forward Loan Purchase
If a loan is not disbursed until a later time, it is entered in the SAP Loans
Management component. The forward loan purchase, however, is
entered in transaction management, and the loan number is used to make
reference to the loan. In other words, you have to enter the loan before
© 2024 by Rheinwerk Publishing Inc., Boston (MA)
Transaction Product Categories
93
5
you can enter the forward loan purchase. The forward loan purchase is
available for only the following loan types: mortgage loans, borrower's
note loans, policy loans, and general loans.
Only the loan contract and the start of the term for the forward loan pur-
chase must be specified. The loan is created once these conditions are
met.
5.21 Commodity Forward
A commodity forward is an unconditional, non-standardized forward
transaction for the purchase or sale of a commodity at a specified price.
The commodity ID is used to make reference to the commodity master
data. The structure features here include specification of a quantity and its
unit, as well as a price and its unit. (Not only currencies, but also currency
units are supported.)
Physical delivery is not possible. The cash settlement is calculated using
the spot price entered. Alternatively, the cash settlement can be entered
directly.
5.22 Commodity Swap
A commodity swap is a swap transaction based on different commodities.
Since all entries are made for each side, you can control both sides inde-
pendently.However, the number of flows must be the same for both
sides. The commodity ID, quantity, payment currency, and (in the case of
a fixed price) the price, or (in the case of a floating price) a possible spread
is entered for all flows associated with a side. In the case of a floating
price, it is possible to determine a price by using the average price for
individual price fixings.
Often, the flows of both parties do not have to be paid, but rather their
difference does. This is possible via netting and a separate flow.
Personal Copy for Jennifer Ogbonna, jennyogbonna2@gmail.com
What’s Next?
94
6
 
6 What’s Next?
One of the primary functions of SAP Treasury and Risk Management is to
handle financial transactions, but it’s not the only function. To fully
understand SAP Treasury and Risk Management, pick up SAP Treasury
and Risk Management by Bryša, Fritzsche, Heß, Jarré, Lövenich, Martin,
and Müller. Learn how to maximize the potential of SAP TRM and how to
apply practical financial concepts to system interfaces. You will find out
how to use SAP TRM to mitigate your financial risk and protect revenue
streams effectively and efficiently!
Recommendation from Our Editors
Want to learn more about SAP TRM? Visit www.sap-
press.com/3166 and check out this E-Bite’s source
book, SAP Treasury and Risk Management!
Buy now and save! Purchase SAP Treasury and Risk
Management now, and receive a $10 discount with your
personal coupon code!
 DLY62G%RL30NU
In addition to this book, our editors picked a few other SAP PRESS publi-
cations that you might also be interested in. Check out the next page to
learn more!
© 2024 by Rheinwerk Publishing Inc., Boston (MA)
http://www.sap-press.com/3166 
http://www.sap-press.com/3166 
 More from SAP PRESS
SAP Simple Finance: See what SAP Simple Finance can do, what it offers
your organization, and where to begin with this introduction to this
feather-light finance solution that packs a punch. Visit www.sap-
press.com/3793 for more information.
407 pages, 1st edition, pub. 02/2015
E-book: $59.99 | Print: $69.95 | Bundle: $79.99
www.sap-press.com/3793
Accelerated Financial Closing with SAP: Learn about the entire financial
close process and find out how to address regulatory requirements, man-
age disclosure management, and report results to key stakeholders.
Explore the potential of financial solutions like FI, CO, and more. Visit
www.sap-press.com/3227 for more information.
296 pages, 1st edition, pub. 10/2013
E-book: $59.99 | Print: $69.95 | Bundle: $79.99
www.sap-press.com/3227
SAP Business Planning and Consolidation: Get a complete overview of
SAP’s planning and consolidation solution. Learn about features, func-
tions, and SAP Business Planning and Consolidation integration opportu-
nities with NetWeaver, SAP BW, and SAP HANA. Visit www.sap-
press.com/3770 for more information.
584 pages, 4th edition, pub. 02/2015
E-book: $69.99 | Print: $79.95 | Bundle: $89.99
www.sap-press.com/3770
Personal Copy for Jennifer Ogbonna, jennyogbonna2@gmail.com
http://www.sap-press.com/3793 
http://www.sap-press.com/3793 
http://www.sap-press.com/3793
http://www.sap-press.com/3227
http://www.sap-press.com/3227
http://www.sap-press.com/3770
http://www.sap-press.com/3770
http://www.sap-press.com/3770
1 
Usage, Service, and Legal Notes
Notes on Usage
This e-book is protected by copyright. By purchasing this e-book, you
have agreed to accept and adhere to the copyrights. You are entitled to
use this e-book for personal purposes. You may print and copy it, too, but
also only for personal use. Sharing an electronic or printed copy with oth-
ers, however, is not permitted, neither as a whole nor in parts. Of course,
making them available on the Internet or in a company network is illegal.
For detailed and legally binding usage conditions, please refer to the sec-
tion Usage, Service, and Legal Notes.
Service Pages
The following sections contain notes on how you can contact us.
Praise and Criticism
We hope that you enjoyed reading this book. If it met your expectations,
please do recommend it. If you think there is room for improvement,
please get in touch with the editor of the book: Hareem Shafi
(hareems@rheinwerk-publishing.com).
We welcome every suggestion for improvement but, of course, also any
praise! You can also share your reading experience via Twitter, Facebook,
or email.
Supplements
Supplements (sample code, exercise materials, lists, and so on) are pro-
vided in your online library and on the web catalog page for this book.
© 2024 by Rheinwerk Publishing Inc., Boston (MA)
mailto:hareems@rheinwerk-publishing.com
mailto:hareems@rheinwerk-publishing.com
You can directly navigate to this page using the following link: http://
www.sap-press.com/3999. Should we learn about typos that alter the
meaning or content errors, we will provide a list with corrections there,
too.
Technical Issues
If you experience technical issues with your e-book or e-book account at
SAP PRESS, please feel free to contact our reader service: support@rhein-
werk-publishing.com.
About Us and Our Program
The website http://www.sap-press.com/ provides detailed and first-hand
information on our current publishing program. Here, you can also easily
order all of our books and e-books. Information on Rheinwerk Publishing
Inc. and additional contact options can also be found at http://www.sap-
press.com/.
Legal Notes
This section contains the detailed and legally binding usage conditions for
this e-book.
Copyright Note
This publication is protected by copyright in its entirety. All usage and
exploitation rights are reserved by the author and Rheinwerk Publishing;
in particular the right of reproduction and the right of distribution, be it
in printed or electronic form.
© 2015 by Rheinwerk Publishing, Inc., Boston (MA)
Personal Copy for Jennifer Ogbonna, jennyogbonna2@gmail.com
http://www.sap-press.com/3999
http://www.sap-press.com/3999
http://www.sap-press.com/
http://www.sap-press.com/
http://www.sap-press.com/
mailto:support@rheinwerk-publishing.com
mailto:support@rheinwerk-publishing.com
Your Rights as a User
You are entitled to use this e-book for personal purposes only. In particu-
lar, you may print the e-book for personal use or copy it as long as you
store this copy on a device that is solely and personally used by yourself.
You are not entitled to any other usage or exploitation.
In particular, it is not permitted to forward electronic or printed copies to
third parties. Furthermore, it is not permitted to distribute the e-book on
the Internet, in intranets, or in any other way or make it available to third
parties. Any public exhibition, other publication, or any reproduction of
the e-book beyond personal use are expressly prohibited. The aforemen-
tioned does not only apply to the e-book in its entirety but also to parts
thereof (e.g., charts, pictures, tables, sections of text). Copyright notes,
brands, and other legal reservations as well as the digital watermark may
not be removed from the e-book.
Digital Watermark
This e-book copy contains a digital watermark, a signature that indicates
which person may use this copy. If you, dear reader, are not this person,
you are violating the copyright. So please refrain from using this e-book
and inform us about this violation. A brief email to info@rheinwerk-pub-
lishing.com is sufficient. Thank you!
Limitation of Liability
Regardless of the care that has been taken in creating texts, figures, and
programs, neither the publisher nor the author, editor, or translator
assume any legal responsibility or any liability for possible errors and
their consequences.
1 
© 2024 by Rheinwerk Publishing Inc., Boston (MA)
mailto:info@rheinwerk-publishing.com
mailto:info@rheinwerk-publishing.com
All rights reserved. Neither this publication nor any
part of it may be copied or reproduced in any form or
by any means or translated into another language,
without the prior consent of Rheinwerk Publishing,
2 Heritage Drive,Suite 305, Quincy, MA 02171.
Rheinwerk Publishing makes no warranties or repre-
sentations with respect to the content hereof and spe-
cifically disclaims any implied warranties of mer-
chantability or fitness for any particular purpose.
Rheinwerk Publishing assumes no responsibility for
any errors that may appear in this publication.
“Rheinwerk Publishing” and the Rheinwerk Publishing
logo are registered trademarks of Rheinwerk Verlag
GmbH, Bonn, Germany. SAP PRESS is an imprint of
Rheinwerk Verlag GmbH and Rheinwerk Publishing,
Inc. 
All of the screenshots and graphics reproduced in this
book are subject to copyright © SAP SE, Dietmar-
Hopp-Allee 16, 69190 Walldorf, Germany.
SAP, the SAP logo, ABAP, BAPI, Duet, mySAP.com,
mySAP, SAP ArchiveLink, SAP EarlyWatch, SAP Net-
Weaver, SAP Business ByDesign, SAP Business-
Objects, SAP BusinessObjects Rapid Mart, SAP
BusinessObjects Desktop Intelligence, SAP Business-
Objects Explorer, SAP Rapid Marts, SAP Business-
Objects Watchlist Security, SAP BusinessObjects Web
Intelligence, SAP Crystal Reports, SAP GoingLive, SAP
HANA, SAP MaxAttention, SAP MaxDB, SAP Partner-
Edge, SAP R/2, SAP R/3, SAP R/3 Enterprise, SAP
Strategic Enterprise Management (SAP SEM), SAP
StreamWork, SAP Sybase Adaptive Server Enterprise
(SAP Sybase ASE), SAP Sybase IQ, SAP xApps, SAP-
PHIRE NOW, and Xcelsius are registered or unregis-
tered trademarks of SAP SE, Walldorf, Germany.
All other products mentioned in this book are regis-
tered or unregistered trademarks of their respective
companies.
Imprint
This e-bite is a publication many contributed to, specifically:
Editor Hareem Shafi
Acquisitions Editor Emily Nicholls
German Edition Editor Patricia Sprenger
Translation Lemoine International, Inc., Salt Lake City, UT
Copyeditor Miranda Martin
Cover Design Graham Geary
Layout Design Graham Geary
Production Graham Geary
Typesetting SatzPro, Krefeld (Germany)
ISBN 978-1-4932-1332-0
© 2015 by Rheinwerk Publishing, Inc., Boston (MA)
1st edition 2015
© 2024 by Rheinwerk Publishing Inc., Boston (MA)
	The Authors of this E-Bite
	What You'll Learn
	1 Financial Transaction
	1.1 Conventions of Use
	Using Icons
	Date
	Input Help
	1.2 Transaction Management Entry Screen
	Creating a Financial Transaction
	Processing a Financial Transaction
	Collective Processing
	Fast Entry and Fast Processing
	1.3 Data Screen
	1.4 Flows
	Main Flows
	Other Flows
	Derived Flows
	1.5 Conditions
	Interest Condition
	Interest Rate-Adjustment Condition
	Capitalized Interest Payment Condition
	Premium Condition
	Repayment Condition
	Price Compensation Condition
	1.6 Underlying
	1.7 Listed Financial Instruments
	1.8 Field Selection
	1.9 Activities
	2 Trading
	2.1 Preparation
	Offer
	Simulation
	2.2 Decision-Making Tools
	2.3 Trading Functions
	3 Back-Office Processing
	3.1 Interest Rate Adjustment
	Planned Record Update
	Planned Record Refresh
	Manual Interest Rate Adjustment
	Automatic Interest Rate Adjustment
	Update Interest Rate Adjustment
	3.2 Price Adjustment
	3.3 Exchange Rate
	Automatic Fixing Processing
	Manual Fixing
	Average Rate Fixing
	3.4 References
	3.5 Settlement
	3.6 Status Management
	3.7 Workflow
	3.8 Change Documents
	4 Operative Reporting
	4.1 Controlling
	4.2 Overview
	5 Transaction Product Categories
	5.1 Securities
	5.2 Fixed-Term Deposit
	5.3 Deposit at Notice
	5.4 Commercial Paper
	Cash-Flow Transaction
	5.5 Interest-Rate Instrument
	5.6 Facility
	5.7 Fiduciary Deposit
	5.8 Foreign Exchange Transaction
	5.9 Cap/Floor
	5.10 Interest Rate Swap
	5.11 Forward Rate Agreement (FRA)
	5.12 Total Return Swap
	5.13 Future
	5.14 Repo
	5.15 Forward Securities Transaction
	5.16 Listed Option
	5.17 OTC Option
	5.18 Securities Lending
	5.19 Forward
	5.20 Forward Loan Purchase
	5.21 Commodity Forward
	5.22 Commodity Swap
	6 What’s Next?
	More from SAP PRESS
	Usage, Service, and Legal Notes
	Notes on Usage
	Service Pages
	Legal Notes
	Imprint