Treasury and Risk Management Configuration PDF

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Treasury & Risk Mgmt. Page 2 of 259 www.sapficoconsultant.com

TABLE OF CONTENTS
INTRODUCTION.........................................................................................................6
1. Treasury and Risk Management.......................................................................7
1.1 General Settings........................................................................................7
1.2 Basic Functions ...................................................................................... 13
1.2.1 Business Partner.............................................................................. 13
1.2.1.1 Define BP Roles.............................................................................. 13
1.2.1.2 Define Number Ranges ................................................................. 16
1.2.1.3 Define Groupings and Assign Number Ranges......................... 21
1.1.1.4 Maintain Industry Systems and Industries .................................. 24
1.2.2 Market Data Management .................................................................... 28
1.2.2.1 Check Exchange Ratios for Currency Translation..................... 28
1.2.2.2 Define Reference Interest Rate .................................................... 29
1.2.2.3 Define Yield Curve Type ................................................................ 32
1.3 Transaction Manager ............................................................................. 41
1.3.1 General Settings..................................................................................... 41
1.3.1.1 Organization..................................................................................... 41
1.3.1.1 .1 Define Calculation Indicator.................................................. 41
1.3.1.1 .2 Define Company Code Additional Data .............................. 42
1.3.1.1 .3 Define Portfolio ....................................................................... 44
1.3.1.1 .4 Define Traders ........................................................................ 47
1.3.1.1 .5 Define User Data .................................................................... 50
1.3.1.2 Transaction Management.............................................................. 51
1.3.1.2.1 Define Field Selection............................................................. 51
1.3.1.2.2 Assign Calendar....................................................................... 59
1.3.1.2.3 Define Leading Currency........................................................ 60
1.3.1.3 Authorization Management ........................................................... 61
1.3.1.3.1 Define Authorization Group for Transactions...................... 61
1.3.1.4 Payment Management................................................................... 62
1.3.1.4.1 Define Number Ranges for Payment Requests ................. 62
1.3.1.4.2 Define Payment Blocking Indicators for Accounting
Documents ................................................................................................ 64
1.3.1.4.3 Define Clearing Account for Payment Requests............. 65
1.3.1.4.4 Define Factory Calendar per Currency.............................. 66
1.3.1.5 Accounting ....................................................................................... 68
1.3.1.5.1 Define Reasons for Revers al................................................. 68
1.3.1.5.2 Define Valuation Areas ........................................................... 69
1.3.1.5.3 Define Accounting Codes ....................................................... 70
1.3.1.5.4 Assign Accounting Codes and Valuation Areas ................. 72
1.3.1.5.5 Initialization of Parallel Valuation Area................................. 74
1.3.1.5.6 Define and Assign Valuation Classes .................................. 78
1.3.5.1.7 Define and Assign Differentiations ........................................ 82
1.3.5.1.8 Assign Consumption Sequence Procedure ...................... 89
1.3.5.1.9 Set the Effects of the Update Types on the Position
Components.............................................................................................. 90
1.3.5.1.10 Define Amortization Procedure......................................... 92
1.3.5.1.11 Define One-Step Price Valuation Procedure .................. 93
1.3.5.1.12 Define Security Valuation Procedure.............................. 96

1.3.5.1.13 Define Price Valuation Procedure for Forward Exchange
Transactions.............................................................................................. 97
1.3.5.1.14 Define Position Management Procedure ...................... 99
1.3.5.1.15 Assign Position Management Procedure....................100
1.3.5.1.16 Assign Update Types for Valuation ..............................101
1.3.5.1.17 Control of Processing of Derived Business Transactions
...................................................................................................................102
1.3.5.1.18 Assign Update Types for Account Assignment Reference
Transfer....................................................................................................103
1.3.5.1.19 Define Account Assignment References.......................103
1.3.5.1.20 Define Account Assignment Reference Determination
(OTC Transactions)...............................................................................106
1.3.5.1.21 Define Update Types and Assign Usages.......................118
1.3.5.1.22 Indicate Update Types as Relevant to Posting...............120
1.3.5.1.23 Define Account Determination...........................................122
1.3.5.1.24 Link to Cash Management.................................................142
1.3.2 Money Market .......................................................................................144
1.3.2.1 Define Product Types...................................................................144
1.3.2.2 Define Number Ranges for Transactio n Types........................148
1.3.2.3 Define Transaction Types............................................................152
1.3.2.4 Define Flow Types ........................................................................156
1.3.2.5 Assign Flow Types to Transaction Type ...................................163
1.3.2.6 Define Calculation Procedure for Derived Flows .....................164
1.3.2.7 Define Derivation Procedures and Rules ..................................166
1.3.2.8 Define Update Types and Assign Usages ................................171
1.3.2.9 Assign Flow Types to Update Types .........................................174
1.3.2.10 Define Correspondence Types .................................................175
1.3.2.11 Define Correspondence Activities............................................176
1.3.2.12 Define Generation of Sub ledger Position Indicator..............183
1.3.2.13 Assign General Valuation Class...............................................185
1.3.3 Foreign Exchange ................................................................................191
1.3.3.2 Define Transaction Types............................................................192
1.3.3.3 Assign Forex Attributes................................................................196
1.3.3.4 Define Flow Types ........................................................................198
1.3.3.5 Assign Flow Types to Transaction Type ...................................200
1.3.3.6 Define Update Types and Assign Usages ................................201
1.3.3.7 Assign Flow Types to Update Typ es .........................................202
1.3.3.8 Assign Update Types for Position Update ................................203
1.3.3.9 Define Correspondence Types...................................................204
1.3.3.10 Define Correspondence Activities............................................205
1.3.3.11 Assign General Valuation Class...............................................208
1.3.4 Securities ...............................................................................................213
1.3.4.1 Define Currency Units ..................................................................213
1.3.4.2 Define Number Ranges for Security Classes...........................214
1.3.4.4 Define Company Code-Dependent Settings for the Product
Type........................................................................................................217
1.3.5 Listed Derivatives .................................................................................230
1.3.5.1 Define Exchange...........................................................................230

1.3.6 OTC Derivatives ...................................................................................233
1.3.6.1 Assign General Valuation Class.................................................233
1.4 Credit Risk Analyzer....................................................................................245
1.4.1 Global Settings .....................................................................................245
1.4.2 Define Collateral Priority .....................................................................246
1.4.3 Define Collateral Type .........................................................................247
1.4.4 Define External Key Figures...............................................................248
1.4.5 Activate/Deactivate Financial Object Integration.............................249
1.4.6 Derive Default Risk Control Parameters for Money Market
transactions .....................................................................................................257
1.4.7 Activate Integrated Default Risk Limit Check...................................259

INTRODUCTION
SAP Treasury and Risk Management is a module that is geared up towards

analyzing and optimizing business processes in the finance area of a
company.
The Treasury and Risk Management in SAP comprises of the following

components:
Transaction Manager Supports the management of financial transactions

and positions
Market Risk Analyzer To analyze interest rate, currency and stock risks . It
helps to provide a reliable evaluation basis for market risk controlling.
Credit Risk Analyzer

It focuses on measuring, analyzing and controlling counterparty default risk. It
tries to cover specific risks associated with financial transactions in a
company. It helps to control risks by setting limits and having an online limit
check,
We have tried to make the configuration process as simple as possible. Enjoy

reading it and implementing it at your clients place.

1. Treasury and Risk Management
1.1 General Settings
SAP Customizing Implementation Guide SAP NetWeaver General

Settings Maintain Calendar
A Calendar needs to be configured in the treasury module so as to have a

working day check on the treasury activities entered into the system by the
finance department.
Click

Most of the public holidays relevant for India are already maintained.
Select

Click

Double click

Change from 2009 to 2098
Click on
Click back
Select

Click

Click
Update the following:-
Click on
1.2 Basic Functions
1.2.1 Business Partner
1.2.1.1 Define BP Roles
SAP Customizing Implementation Guide Financial Supply Chain

Management Treasury and Risk Management Basic Functions SAP
Business Partner for Financial Services General Settings Business
Partner Basic Settings Business Partner Roles Define BP Roles
Here you define the business partner roles and their attributes.
You also define the role categories with other relevant data.
The BP role categories are stored in a table that has the delivery class E.

SAP has delivered various business partner roles, role categories and BP
views.
Do not modify these settings.
You should modify these entries only if, for example, you
Want to use a completely different screen sequence
Need additional screen sequences for your own role categories
Have defined your own processes that should be programmed on role

categories.
You should not, in particular, modify the role categories delivered by SAP
because SAP programs may access them directly.
We follow the standard system settings
Double click

Click
Double click

1.2.1.2 Define Number Ranges

Partner Basic Settings Number Ranges and Groupings Define Number
Ranges
.
Here you define number ranges for business partners.
The defined number ranges are assigned to groupings in the Define

groupings and assign number ranges activity.

Click
Click

Click
Let us now create our own number range
Click on

Click
Click

Click on

Click
1.2.1.3 Define Groupings and Assign Number Ranges

Partner Basic Settings Number Ranges and Groupings Define
Groupings and Assign Number Ranges .
Here you maintain groupings for business partners.
The following groupings are supplied by SAP:

0001
0002

Click on
Click on

Select ZTR9 as Int. Std. gro uping
Click on
1.1.1.4 Maintain Industry Systems and Industries

Partner Organizations Maintain Industry Systems and Industries
Here you define Industry Systems and industries. You can create different
industry systems, to which you can assign several industries in each case.
You can assign several industry systems to one business partner. You must
identify one industry system as the standard industry system. The industry
system identified as the standard industry system is displayed in the dialog in
the initial screen for the maintenance of industry data.

Industry System 0001 Standard Industry System has been maintained.
Select
Double click

Let us create a new Industry key for Petrochemicals with key 02
Position cursor on
Click
Select Same Level

Click
Click on

1.2.2 Market Data Management
1.2.2.1 Check Exchange Ratios for Currency Translation

Management Treasury and Risk Management Basic Functions Market
Data Management Master Data Currencies Check Exchange Ratios
for Currency Translation
Here you enter the translation ratios for currency translation. You enter these
ratios for each exchange rate type and currency pair. You also specify
whether you want to use an alternative exchange rate type for specific
currency pairs. We follow the standard system settings.
Click

1.2.2.2 Define Reference Interest Rate

Data Management Master Data Settings for Ref. Interest Rates and
Yield Curves for Analyzers Define Reference Interest Rate
Here you define the reference interest rates by entering a key and a
mnemonic name. All other fields are purely informative.
We follow standard system settings.
In addition we maintain MIBOR and MIFOR rates.

Click on

Click on
Select
Click
Click on
Similarly maintain MIB0RINR03 to MIBORINR12

1.2.2.3 Define Yield Curve Type

Data Management Master Data Settings for Ref. n I terest Rates and
Yield Curves for Analyzers Define Yield Curve Type
You define yield curve types using the attributes yield category, interest
calculation method, quotation type, read procedure, interpolation category,
and as many currencies as necessary. Then you assign them reference
interest rates.
Click

Click

Click

Click

Double click

Now update the following:-

Click
Click Select All

Click

Click on
1.3 Transaction Manager
1.3.1 General Settings
1.3.1.1 Organization
1.3 .1.1 .1 Define Calculation Indicator
SAP Customizing Implementation GuideFinancial Supply Chain

Management Treasury and Risk ManagementTransaction Manager
General Settings Organization Define Calculation Indicator
Here you define your indicators for calculating exchange rates.

The Standard rate calculation indicator is 01 and EU

We adopt the standard settings
1.3.1.1 .2 Define Company Code Additio nal Data

General Settings Organization Define Company Code Additional Data
Here you specify the swift code, the exchange rate calc ulation indicator, the
price type for evaluation. You also attach the factory calendar relevant for the
company code.

Click on

Click on
1.3.1.1 .3 Define Portfolio

General Settings Organization Define Portfolio
Here you define portfolio for your company code .

Click on

Click on

1.3.1.1 .4 Define Traders

General Settings Organization Define Traders
Here you define traders for your company code.

Click on

Click on

1.3.1.1 .5 Define User Data

General Settings Organization Define User Data
You can make the following individual settings per user here:
You can make settings to determine whether and how a workday check takes
place. You can determine whether there will be an exchange rate input or
SWAP input check or both. The input check compares the values entered with
the current market data in the rate tables. You receive warning messages if
there are serious inconsistencies. You can define a default value for the trader
name.
We maintain for Rate and swap entry check a warning
Click on
Click on

1.3.1.2 Transaction Management
1.3.1.2.1 Define Field Selection

General Settings Transaction Management Define Field Selection
Here you define which field should be shown or hidden and whether entries
should be required or optional. All the fields that are visible in the entry
screens are grouped according to business criteria.
You define your settings as field selection strings.

These field selection strings can then be assigned directly to a product
category, which means they apply for all the product types within that product
category.
Once the field selection strings have been defined, they can be assigned at
the following levels:
1. Product type and company code
2. Transaction type
3. Activity category
4. Function
When you call up a transaction management function, the relevant field
selection string is taken from this table. The system first searches for a field
selection string for the function. If the search is unsuccessful, it searches for
the field selection string for the activity category. If this search is also
unsuccessful, it searches through the next level up. The last search level is
the assignment to the product type and company code.
You are not free to configure the field selection controls as you wish. You are
not allowed to make settings that contradict the predefined system settings.
For example, if you attempt to hide a field group regarded as mandatory by
the system (essential to the business process or necessary for technical
reasons), the system ignores the setting.

Double click

Click on

Click on
Select
Click

Select authorization group

Click on
Now select
Double click
Select

Click on
Click
Click

Click on

Click on
1.3.1.2.2 Assign Calendar

General Settings Transaction Management Currencies Assign
Calendar
Here you assign a calendar to the various currencies. When you enter the
transaction, the system performs a working day check to check all the flows
that result from the transaction against the calendar defined here.
Click on

Click on
1.3.1.2.3 Define Leading Currency

General Settings Transaction Management Currencies Define Leading
Currency
Here you define the leading currencies for the various currency pairs. The
system uses these settings to determine the rate notation when you enter
foreign exchange transactions and forex options.
In addition, you can enter the number of days between conclusion of the forex
transaction and the value date in the Spot days field. Usually this is two
working days. Depending on the currency, there may be deviations from this
rule. You should only make an entry in this field if practices on the
international forex market follow a different rule to the usual two day
Click on

Click on
1.3.1.3 Authorization Management

1.3.1.3.1 Define Authorization Group for Transactions

Management Treasury and Risk ManagementTransac tion Manager
General Settings Authorization Management Define Authorization Group
for Transactions
Here you can define the authorization groups in Treasury Management. The
'Authorization group' is a check field for authorization object: T_DEAL_AG,
which supports customer-specific enhancements for checking transaction
authorizations.
Example:
A user should only be allowed to execute orders which relate to his
department. In this case, the relevant authorization group has to be entered
when orders are created.
The authorization check only runs if the field is filled.

Click on
Click on
1.3.1.4 Payment Management

1.3.1.4.1 Define Number Ranges for Payment Requests

General Settings Payment Management Payment Requests Define
Number Ranges for Payment Requests
Here you define the number range for payment requests. We use the
standard configured number range.

Click

1.3.1.4.2 Define Payment Blocking Indicators for Accounting Documents

Payment Blocking Indicators for Accounting Documents
Here you define the payment blocking indicator which is used to flag the
accounting documents corresponding to the payment requests.
The payment blocking reason 'P' for payment requests has been defined in
the standard system.

1.3.1.4.3 Define Clearing Account for Payment Requests

Clearing Account for Payment Requests
Here you define a G/L account which is to be posted when you generate
payment requests.
You can use this clearing account for payment requests to group payments
and then post them against bank (sub) accounts .
Click on

Click on
1.3.1.4.4 Define Factory Calendar per Currency

General Settings Payment Management Payment Handling Value
Date Define Factory Calendar per Currency
Here you define the factory calendars for payment currencies. The calendars
should contain the public holidays which apply in the country in which the
currency is traded.

Click on
Click on

1.3.1.5 Accounting
1.3.1 .5.1 Define Reasons for Reversal

General Settings Accounting Define Reasons for Reversal
Here you define reasons for reversing documents. You can enter these
reasons when reversing documents (in addition to the FI reversal reason).
In addition, you can determine the type of the payment block for the items
generated by the reversal.
We use the standard reversal reasons.

1.3.1.5.2 Define Valuation Areas

General Settings Accounting Organization Define Valuation Areas
Here you define all valuation areas that you require. You define valuation area
001 that corresponds to the 'operative valuation area', and all other parallel
valuation areas.
We use the standard valuation areas.

Click on
1.3.1.5.3 Define Accounting Codes

General Settings Accounting Organization Define Accounting Codes
Here you define your accounting codes and assign the FI Company code to
them in a 1:1 relationship.

Click on
Click on

1.3.1.5.4 Assign Accounting Codes and Valuation Areas

General Settings Accounting Organization Assign Accounting Codes
and Valuation Areas
Here you assign the valuation areas to accounting codes.
We will maintain the settings for group reporting now.
Click on
Click on
Click

We will now maintain for local reporting the following setting:-
Click on
Click on

1.3.1.5.5 Initialization of Parallel Valuation Area

General Settings Accounting Organization Initialization of Parallel
Valuation Area
You must initialize the parallel valuation areas before you can use the
corresponding functions. You initialize the data once for a certain key date.
Click

Update the key date
Click

Take a drop down
Select
Click

Similarly also update for other product groups 001 Securities

1.3.1.5.6 Define and Assign Valuation Classes

General Settings Accounting Settings for Position Management Define
and Assign Valuation Classes
You define general valuation classes (GVCs) and special valuation classes for
each valuation area and assign these classes to each other.
Let us follow the standard settings:-

Assignment of valuation area to valuation class
Double click
Click

Double click
Here we see the assignment of General valuation class to specific valuation

classes:-

Click

1.3.5.1.7 Define and Assign Differentiations

and Assign Differentiations
A position is the smallest unit within the financial subledger. Valuations are
carried out and derived flows are generated based on position. Differentiation
terms determine how the positions are shown.
The differentiation terms are fixed for loans, transactions and listed options
and futures. For security positions, some differentiation terms are fixed and
you can define others here.
Portfolio and Securities are maintained as Differentiators.
Click on

Click on
Select
Double click
Click on


Click on
Click twice

Select
Double click
Click on

Click on
Click
Click
Now select
Double click
Click on

Click on
Click twice
Now select
Double click
Click on

Click on
Click on
1.3.5 .1.8 Assign Consumption Sequence Procedure

General Settings Accounting Settings for Position Management Assign
Consumption Sequence Procedure
Here you specify for single positions (securities and listed derivatives) which
consumption sequence procedure you want to use for determining the
positions to be sold.

You can choose between the following consumption sequence procedures:
LIFO = Last in First out; here, the position bought last is s old first.
FIFO = First in First out; here, the position bought first is sold first.
Manual assignment; here, for every sale a dialog box is displayed where you
specify which positions you want to sell.
There is an option of distributing the sale to different single positions.
Click on
Click on
1.3.5.1.9 Set the Effects of the Update Types on the Position Components

Management Treasury and Risk ManagementTra nsaction Manager
General Settings Accounting Settings for Position Management Set
the Effects of the Update Types on the Position Components
Here you assign a position change category to update types. This assignment
is only relevant for those update types that are not generated in the financial
subledger
In the case of derived business transactions, valuation flows, position

initialization flows etc, you may not make any assignments here.
Before you set the effects of the updates types, you need to define
Update types under the following path.

General Settings Accounting Hedge Accounting Update Types
Define Update Types and Assign Usages
Click on
Click on
Now you assign the update type to position components .
Click on

Click on
1.3.5.1.10 Define Amortization Procedure

General Settings Accounting Settings for Position Management Key
Date Valuation Define Amortization Procedure
We use the standard amortization procedure

1.3.5.1.11 Define One-Step Price Valuation Procedure

Date Valuation Define One-Step Price Valuation Procedure
We use the one step price valuation procedure available in standard SAP
system.

Double click

Click

1.3.5 .1.12 Define Security Valuation Procedure

Date Valuation Define Security Valuation Procedure
We use the security valuation procedure available in standard SAP system.

1.3.5.1.13 Define Price Valuation Procedure for Forward Exchange
Transactions

Date Valuation Define Price Valuation Procedure for Forward Exchange
Transactions
We use the standard SAP settings available for price valuation procedure for
forward exchange transactions.
Double click

Click

1.3.5.1.14 Define Position Management Procedure

Position Management Procedure
Here you create the rules for maintaining the positions, for example, how the
positions are to be valued, and also how the derived business transactions
are to be generated the case of position outflows or balance sheet transfers.
We use the sap standard settings.

1.3 .5.1.15 Assign Position Management Procedure

General Settings Accounting Settings for Position Management Assign
Position Management Procedure
Here you define the rules that govern how the position management
procedures are assigned to the positions.
You control the assignment using the parameters Accounting code, valuation
area, valuation class, product category, product type, transaction type,
portfolio and securities account group.
You can work with initial entries, that is, you could choose a position
management procedure for valuation class '01' without specifying the other
factors. The selected position management procedure is then assigned to all
positions with valuation class '01' unless there are other suitable entries for
which the remaining factors to the right are specified.
We follow the standard settings.

1.3 .5.1.16 Assign Update Types for Valuation

General Settings Accounting Key Date ValuationUpdate Types
Assign Update Types for Valuation
We follow the standard settings.

1.3 .5.1.17 Control of Processing of Derived Business Transactions

General Settings Accounting Derived Business Transactions Control of
Processing of Derived Business Transactions
Here you specify whether the derived business transactions are to be

processed online or offline.
In case online processing is selec ted, then the derived business transactions
are updated immediately every time a business transaction leads to a change
in a position.
In case offline processing, then derived business transactions are not
generated immediately. In order to generate the derived business
transactions, you can use the application function 'Update Derived Business
Transactions Transaction code: TPM27
Click on
Click on

1.3 .5.1.18 Assign Update Types for Account Assignment Reference Transfer

General Settings Accounting Transfer Account Assignment Reference
Update Types Assign Update Types for Account Assignment Reference
Transfer
Here you define the components to be included in the account assignment

reference transfer and the corresponding update types for these components.
You restrict the components by selecting account symbols. The system only
considers account symbols with the following posting categories:
Position posting in position currency

Other G/L account posting in position currency
Other G/L account posting in payment currency
The following entries have been defined in the standard sap settings:-
1.3 .5.1.19 Define Account Assignment References

General Settings Accounting Link to Other Accounting Components
Define Account Assignment References

Account assignment references are required for each sub ledger position and
also for each class position in a securities account.
You can use the account assignment references to determine the G/L account
in FI in which the relevant position is to be managed. You can use the account
assignment references to control the posting of the sub ledger positions in the
general ledger. You can use the account assignment reference of the class
positions in the securities account to control the posting of dividend payments,
interest payments and repayments for each securities account class position.
You do this by making the assignment of G/L accounts in FI dependent on
the account assignment reference for each account symbol.
You create the account assignment references independent of the valuation

areas. You can assign the account assignment references to positions
valuation area-dependent and/or you control the account determination per
valuation area and account assignment reference.
For Money Market area, following Account Assignment References have been
defined:
Click on

Click on
For Foreign Exchange
Click on

Click on
1.3 .5.1.20 Define Account Assignment Reference Determination (OTC

Transactions)

Define Account Assignment Reference Determination (OTC Transactions)
Here you define rules for automatic determination of account assignment

references for the parallel valuation areas. You define the rules for each
product group.
To make postings to a position, you have to assign account assignment

references to each sub ledger position and each class position in a securities
account.
The system determines the account assignment references for the sub ledger
positions in the parallel valuation areas when you first post the position in the
parallel valuation areas using the Post Transactions function (Transaction
code TPM10).

Let us select the first one
Click

Click

Click

Similarly click the second derivation rule
Click

Click

The third derivation rule
Click

Standard derivation rule
Click

Click
Change the following:-
Click on

Click to reach foreign exchange area
Change the following:-
Click on

Now Click on
Click

Update the following
Also update this
Click on

1.3 .5.1.21 Define Update Types and Assign Usages

General Settings Accounting Accrual/Deferral Update Types Define
Update Types and Assign Usages
Here you define all the update types that are required to manage the positions
in the parallel valuation areas. Here you also assign update types to different
"usages." You can assign an update type to several usages.
An update type is assigned to a usage:-
If it is an update type created by the usage

If it is an update type that is processed in the usage
The following usages require update types:

0001 Transaction management
0002 Securities account management
0003 Securities account transfer
0004 Corporate action
0005 Exercise rights
0006 Accrual/deferral
0007 Additional flows (exercising rights)
1000 Operative loan management
2001 Margin management listed options and futures
9000 Position initialization
9001 Derived business transactions
9002 Key date valuation
9004 Local currency reconciliation
9005 Hedge accounting
9006 Valuation class transfer
9007 Transfer account assignment reference
Click on

Click on .
For Foreign exchange the following update types have been identified which
are SAP standard:-

1.3.5.1.22 Indicate Update Types as Relevant to Posting

Indicate Update Types as Relevant to Posting
Here you specify whether or not the update type is relevant for posting.
This can depend on the valuation area. This means that you can post an
update type in one valuation area and not in another.
If you flag an update type as not relevant for posting it is not posted
even if an account determination was specified in Define Account
Determination.
Click on

Click on
For foreign exchange the standard SAP settings are as follows:-

1.3.5 .1.23 Define Account Determination

Define Account Determination
Here you define the account determination settings for the flows in the parallel
valuation areas. The account determination settings define the accounts to be
used when the flows are posted to Financial Accounting.
The system only posts flows in the parallel valuation areas if an update
type is set as relevant to posting under Indicate Update Types as
Relevant to Posting and posting specifications have been defined for
the corresponding update types in this configuration step.
You can define different account determination settings for an update type,
depending on the valuation area. You could, for exam ple, assign different
posting specifications to an update type in valuation area 001 than for the
same update type in valuation area 002. Alternatively, you could use the
same posting specifications, but assign different G/L accounts to a particular
account symbol for each valuation area.

Double Click on

We maintain all the standard settings and also maintain 4.2.2.1
Commission/ charges.
Click on
Click on
Click
Further change the description of to

Commission/charges as follows:-

Click on
Double Click on

We maintain the standard system settings in addition update the following-
13102 Withholding tax on Interest Revenue Received to Bank

14314 - Loan Processing Fees to Bank Clearing
14502 - Bank Clearing to With Tax on Interest Exp
Click on

Click on
Click

Click on
Click on
Click

Click on
Click on
Click
Double click

Click on

Click on
Double click
Click on

Click on
Change the account determination of bank clearing as follows:-
Account determination for foreign exchange:-

Standard sap settings are available
Double click to display the settings

Double click
Double click

Click on
Click on
Click

Double click
Click on
Click on
Click on

Click on

Click on
Click on

Click on
Click on


Click on
For securities update the following:-

1.3.5 .1.24 Link to Cash Management

Management Treasury and Risk Management Transaction Manager
General Settings Link to Cash Management Assign Planning Levels
In order to update Cas h Management, you need to assign a planning level for
the company code and product type. The Cash Management planning level
explains the origin of the opening and closing account balances for the cash
position and liquidity forecast.

Click on
51A is Fixed term deposit - Domestic

51B is Fixed term deposit Global
While transaction activity category is as follows
Levels created are

Click on
Likewise you can update all other products.
1.3.2 Money Market
1.3.2.1 Define Product Types

Money Market Transaction Management Product Types Define
Product Types
Product types help to differentiate between different Money Market financial

instruments. Differentiation is necessary if the individual instruments are
subject to different processing rules or if we wish to create different levels for
evaluation. By assigning different structure characteristics, various forms of
transactions can be predefined.
Only via the combination of the product type with a transaction type is the
financial transaction finally set.
Here we maintain the product types we require.

Change the following from
To
Double click

Change from to
Click on
Change from
To

Double click
Change from to
Click on

1.3.2 .2 Define Number Ranges for Transaction Types

Money Market Transaction Management Transaction Types Define
Number Ranges
Here we define number range intervals for financial transaction types. The
financial transactions generated in the application receive a number
comparable with the document number from Financial Accounting. The
number assignment can either be transferred internally by the system or you
can specify the number externally.
The assignment of transactions to the number range takes place in the next
configuration step Define transaction types.
It may be noted that this number range is not dependant on Financial Year.

Click
Click

Click

Click

1.3.2.3 Define Transaction Types

Money Market Transaction Management Transaction Types Define
Transaction Types
Here we define the transaction type and assign them to the product types.
Number range is assigned to the transaction types in this step.
Where necessary, Limit Group can be assigned to product / transaction types.

The limit product group is used to group financial instruments for using as
characteristics in limit management.
Double click

Click

Click

Click

1.3.2.4 Define Flow Types

Money Market Transaction Management Flow Types Define Flow
Types

Here we define the necessary Flow Types for the product types. A flow type
must be defined for all possible flows in a transaction so that they can later be
assigned.
To the flow types, we assign
- A classification,
- Flow category and
- Calculation category.
The classification divides the flow types according to business criteria. The
flow category allows the system to interpret our settings; the calculation
category determines the representation in the cash flow.
Alongside the settings which determine whether the flows are to be updated in
Cash management and FI (i.e. they are cash forecast and posting relevant),
this step allows us to consider data for valuation, accruals/deferrals and
display in the drilldown reporting tool.
Further, we specify whether payment requests and individual payments

should be possible for certain flows.
Flow types defined in Standard SAP have been used
In addition to standard flow types, following flow types have been defined:
1903 -- Loan Processing Fees
5004 Withholding Tax Int Income Received
5006 Withholding Tax Interest Expense Paid

Double click

Change the individual payment from
To
Click on
Click

Click on
Click on
Click

Click on
Click on
Click

Click on
Click on

1.3.2.5 Assign Flow Types to Transaction Type

Money Market Transaction Management Flow Types Assign Flow
Types to Transaction Type
Here we assign flow types to each product type at the transaction type level
Here we only assign the flow types that are not generated via a condition
type. With a time deposit, for example, it is only necessary to assign the
principal increase/decrease and, possibly, interest capitalization flow types.
Interest rates and repayments are generated via a condition category.
Click on

Click on
1.3.2.6 Define Calculation Procedure for Derived Flows

Money Market Transaction Management Flow Types Derived Flows
Define Calculation Procedure for Derived Flows
Here we define the calculation procedures for generating derived flows.

By defining calculation procedures, we can control the amount of the derived
flows in relation to the currency and the amount of the original flow.

Click on

Click on
1.3.2.7 Define Derivation Procedures and Rules

Money Market Transaction Management Flow Types Derived Flows
Define Derivation Procedures and Rules
You can set up the transaction management area of the system to generate
additional flows automatically on the basis of an original flow. You do this by
defining derivation procedures and then assigning rules to each procedure.
The rules determine how one flow is generated from another.
The derived flow can either be a specified fixed amount, or a percentage of
the original flow amount. You can also set up the system to calculate the
derived flow amounts differently according to the currency and original flow
amount.
This function is available for the money market, foreign exchange, securities
and derivatives areas. You define the calculation and derivation procedures
globally for all applications. This means that you always see all the calculation
and derivation procedures that have been defined, regardless of the IMG
section you are in. By contrast, the derivation rules are specific to a particular
area, and can only be created or changed within the IMG for that area. If, for
example, you define rules for a tax on interest in the securities area, these

settings are not visible in the money market, foreign exchange and derivatives
areas.
In order to apply a derivation procedure when a transaction is created,

you must assign the derivation procedure to a business partner. We
make this assignment in the business partner master data using the
function Standing Instructions: Derived Flows.
Click on
Click on
Select
Double click

Click on

Click on
Click twice until you reach the following screen
Select
Double click

Click on

Click on
1.3.2.8 Define Update Types and Assign Usages

Money Market Transaction Management Update Types Define
Update Types and As sign Usages
Here we define all the update types that are required to manage the positions
in the parallel valuation areas.
In addition to standard update types, following update types were defined
corresponding to new flow types created for Money Market:
MM1903 - : Loan Processing Fees
MM5002- :TDS on Interest Income Received
MM5007+ : Withholding Tax on Interest Expense Paid
In addition, following settings were done:

Transaction Management - MM1903 - : Loan Processing Fees
Transaction Management - MM5002- :TDS on Interest Income
Received
Transaction Management - MM5007+ : Withholding Tax on
Interest Expense Paid
The update types were already maintained in the earlier steps

We need to assign Update Type to Usage Types
Double click

Click on

Click on
1.3.2.9 Assign Flow Types to Update Types

Money Market Transaction Management Update Types Assign Flow
Types to Update Types
Here we assign the corresponding update types to the flow types in the
Money Market, Foreign Exchange, Securities and Derivatives areas for
updating the transaction data to the parallel valuation areas.
In addition to standard system settings, following settings are done:
Click on
Click on

1.3.2.10 Define Correspondence Types

Money Market Transaction Management Correspondence Define
Correspondence Types
Here, we can create our own correspondence types or transfer/ change the
specifications of the existing ones.
Correspondence types are divided into internal and external correspondence
types. The main difference is that internal correspondence types can only be
controlled via "Assign forms" in Customizing; external correspondence types
are controlled via the busines s partner in standing instructions.
.
Standard correspondence types have been used as given below:
001 Confirmation
002 Dealing Slip

1.3.2.11 Define Correspondence Activities

Money Market Transaction Management Correspondence Define
Correspondence Activities

Various parameters as given below are used here to control when and with
which product and transaction types correspondence can be carried out.
The settings that you make here are also relevant for controlling SWIFT
confirmations and IDocs:
Company code (required entry)
Product type (required entry)
Transaction type (required entry)
Activity type e.g. contract, settlement (required entry)
Last function e.g. new contract, reversal (optional entry). If no
function is specified, then correspondence is carried out for all
functions of the activity category.
The "Counter confirmation required" field controls whether a counter

confirmation should take place for the business partner. Additionally, the
"Counter confirmation" field must be set for the business partner-dependant
standing instructions - provided that you carry out a confirmation match with
the corres ponding business partner.
Click on

Click
Click

Click

Click

Click

Click

Click on
1.3.2.12 Define Generation of Sub ledger Position Indicato r

Money Market Transaction Management Position Indicator Define
Generation of Subledger Position Indicator
Here you define per transaction, product group, accounting code and
valuation area how the sub ledger position indicator should be created.
You can choose from the following settings:
1) Generate position indicator automatically:

If you select this setting, the subledger position indicator is always
created automatically according to your settings in Customizing.

2) Generate position indicator manually:
If you select this setting, you must always create the sub ledger
position indicator manually.
3) POPUP (manual/automatic)
If you select this setting, a dialog box appears whenever it is necessary
to create a new sub ledger position indicator. The dialog box asks you
whether you want to generate the position indicator manually (branches to
manual generation) or automatically.
If you do not make any settings here, the subledger position indicator is
always created automatically.
We maintain the setting Generate Position indicator automatically.
Click on
Click on

1.3.2.13 Assign General Valuation Class

Money Market Transaction Management Assign General Valuation
Class
A general valuation class must be assigned to every financial transaction from

which the special valuation classes of different valuation areas can be
derived.
Here we define a general valuation class depending on the company code,

product type and transaction type which si used as a default value when
entering a transaction type.

Select
Also select

Click

Now replace 1000 with company code 9101

Click

Click on

1.3.3 Foreign Exchange

Foreign Exchange Transaction Management Product Types Define
Product Types
Product types help to differentiate between different financial instruments.

Differentiation is necessary if the individual instruments are subject to different
processing rules or if you wish to create different levels for evaluation.
Change the description as follows:-

Click on
1.3.3.2 Define Transaction Types

Foreign Exchange Transaction Management Transaction Types
Define Transaction Types
Here we define transaction type and assign them to the product types . We
assign the number range to this transaction type.

Double click

Double click

Double click

1.3.3.3 Assign Forex Attributes

Foreign Exchange Transaction Management Transaction Types
Assign Forex Attributes
Here we maintain the attributes for foreign exchange transactions.

Double click

1.3.3.4 Define Flow Types

Foreign Exchange Transaction Management Flow Types Define Flow
Types
Here we define the necessary Flow Types for the product types. A flow type
must be defined for all possible flows in a transaction so that they can later be
assigned.
.

Double click

1.3.3.5 Assign Flow Types to Transaction Type

Foreign Exchange Transaction Management Flow Types Assign Flow
Types to Transaction Type
Here we assign flow types to each product type at the transaction type level
that is necessary in order to completely portray a financial product.
We use the standard flow type.

1.3.3.6 Define Update Types and Assign Usages

Foreign Exchange Transaction Management Update Types Define
Update Types and Assign Usages
Here we define all the update types that are required to manage the positions
in the parallel valuation areas.
Standard update t ypes are maintained.
Double click

1.3.3.7 Assign Flow Types to Update Types

Foreign Exchange Transaction Management Update Types Assign
Flow Types to Update Types
Here we assign the corresponding update types to the flow for updating the
transaction data to the parallel valuation areas.
Standard system settings were maintained.

1.3.3.8 Assign Update Types for Position Update

Foreign Exchange Transaction Management Update Types Assign
Update Types for Position Update
Here you assign an update type for open and close transactions for each
product type and transaction type. Standard system settings were maintained

.
1.3.3.9 Define Correspondence Types

Foreign Exchange Transaction Management Correspondence Define
Standard correspondence types have been used as given below:

001 Confirmation
002 Dealing Slip

1.3.3.10 Define Correspondence Activities

Foreign Exchange Transaction Management Correspondence Define
Various parameters are used here to control when and with which product
and transaction types correspondence can be carried out.
Click on

Click

Click on

Foreign Exchange Transaction Management Assign General Valuation
Class

derived.
Here we can define a general valuation class depending on the company

code, product type and transaction type which is used as a default value when
entering a transaction type.

Select

Click
Replace company code 1000 with 9101

Click

Click on

1.3.4 Securities
1.3.4.1 Define Currency Units

Securities Basic Settings Define Currency Units
Click on

Click on
1.3.4.2 Define Number Ranges for Security Classes

Securities Master DataProduct Types Define Number Ranges for
Security Classes
Here we define number ranges for security class which we later assign to
product types.
Click


Securities Master DataProduct Types Define Product Types
Here we define product types and assign each one to a condition group, a
product category, and a number range.

Double click

1.3.4.4 Define Company Code-Dependent Settings for the Product Type

Securities Master Data Product Types Define Company Code-
Dependent Settings for the Product Type
Click on

A drop down in the FI posting field is shown as below:-

A drop down in the field posting control is as shown below:-
Click on
Double click

Click on

Click on
Click thrice to come to the main screen

Click on

Click



Click

Click on
Click

Select
Double click
Click on

Click on
Click twice
Select
Double click
Click on

Click on
Similarly update 11 B Equity Warrants with Valuation class 01 SEC CA
1.3.5 Listed Derivatives
1.3.5.1 Define Exchange

Listed Derivatives Basic Settings Define Exchange
Here we define the relevant exchanges and enter important parameters and
information for each exchange.

Click on

Click on
Click
Click on

Click on
1.3.6 OTC Derivatives

OTC Derivatives Transaction Management Assign General Valuation
Class

derived.

Select

Click

Select

Click

Select

Click
Select

Click

Select

Click

Replace all entries with company code 9101

Click on

1.4 Credit Risk Analyzer
1.4.1 Global Settings

Management Treasury and Risk Management Credit Risk Analyzer
Basic Settings Global Settings
Here we specify whether we want to use the Default Risk and Limit System
component.
We use the standard sap settings.

1.4.2 Define Collateral Priority

Basic Settings Master Data Define Collateral Priority
Here we define the possible priorities for collateral provision. In the case of
multiple collateral provision for one single transac tion, the priorities of the
collateral provision determine the sequence in which the credit of this to the
primary transaction occurs. However, it is also possible to assign more than
one collateral item of the same priority to one single transaction.
We use the standard settings.

1.4.3 Define Collateral Type

Basic Settings Master Data Define Collateral Type
Here we define the collateral type. For each collateral type you need to define
whether the collateral is tangible or personal by using the collateral category.
In addition, you can assign to the collateral type a default value for the
collateral priority. This default value is proposed when you choose the
collateral type when creating collateral.

1.4.4 Define External Key Figures

Basic Settings Master Data Define External Key Figures
Here we define key figure types. Key figure types represent external key
figures which can be transferred to the SAP system for evaluations. The
external key figures themselves are not calculated by SAP.

1.4.5 Activate/Deactivate Financial Object Integration

Basic Settings Automatic Integration of Financial Objects in Transaction
Money Market Activate/Deactivate Financial Object Integration
To be able to enter financial object data at the same time as we create master
data, set the Component Active indicator. When we set this indicator, in online
processing the system displays the relevant screens for entering transaction
data for the component in question (such as Profitability Analysis, and Default
Risk Limitation). We can then enter the information required for the financial
objects.
We can a lso define how the system is to react to errors. You select:
v Completely active if the system is not to save the master data for the
transaction if there are errors
v Partially active if you want the system to save the master data but not
to save the financial object part that is incorrect. In this case, a warning
message is triggered when the system saves the data.
We can activate automatic financial object integration based on the company

code and the product type for the following transactions:
Loans
Foreign exchange transactions
OTC derivatives
Money market transactions
Click on

Click on

Click on

Click on
Double click
Click on

Click

Click on
Click

Double click
Click on

Click on
Activate

Click on
1.4.6 Derive Default Risk Control Parameters for Money Market

transactions

Money Market Derive Default Risk Control Parameters for Money Market
Transactions
Here we can define the derivation strategy. A derivation strategy consists of

several derivation steps with which characteristic values and control
parameters can be derived one after the other.
Each of these steps describes a derivation type, which can be used to fill a
number of target fields with information from a number of source fields. Hence
each step describes a logical relationship between source and target fields.

Click

1.4.7 Activate Integrated Default Risk Limit Check

Activate Integrated Default Risk Limit Check
Click on
Update th e following:-
Click on

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Warning and Disclaimer

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SAP Treasury and Risk Management is a module that is geared up towards

The Treasury and Risk Management in SAP comprises of the following

Transaction Manager Supports the management of financial transactions

Credit Risk Analyzer

We have tried to make the configuration process as simple as possible. Enjoy

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1.1 General Settings

SAP Customizing Implementation Guide SAP NetWeaver General

A Calendar needs to be configured in the treasury module so as to have a

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Update the following:-

1.2 Basic Functions

1.2.1 Business Partner

1.2.1.1 Define BP Roles

SAP Customizing Implementation Guide Financial Supply Chain

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Do not modify these settings.

Want to use a completely different screen sequence

Need additional screen sequences for your own role categories

Have defined your own processes that should be programmed on role

We follow the standard system settings

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SAP Customizing Implementation Guide Financial Supply Chain

The defined number ranges are assigned to groupings in the Define

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Let us now create our own number range

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1.2.1.3 Define Groupings and Assign Number Ranges

SAP Customizing Implementation Guide Financial Supply Chain

Here you maintain groupings for business partners.

The following groupings are supplied by SAP:

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Update the following:-

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1.1.1.4 Maintain Industry Systems and Industries

SAP Customizing Implementation Guide Financial Supply Chain

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Select Same Level

Update the following:-

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1.2.2.1 Check Exchange Ratios for Currency Translation

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SAP Customizing Implementation Guide Financial Supply Chain