Temenos Transact
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Introduction to Institutional Custody

The Institutional Custody (GC) module handles the account servicing functionality to the bank's institutional customer. It covers settlement instructions, settlement confirmation, statement of holdings, corporate action notification, instruction management and confirmation handling. This module handles incoming SWIFT messages from qualified institutional customers, and generates outgoing notifications and confirmations.

This module also supports the creation of order based on SWIFT (MX) messages. The entire chain of MX messages related to order creation and management are supported in Temenos Transact.

Product Configuration

The following configuration is set up to enable the system to automatically create the trades and transfers for the customers (through incoming SWIFT MT540-543).

This application is used to record the global parameter details for custody only business. The broker for custody only trades is an internal technical broker. The technical broker must be defined in this application using the Internal Broker field.

The Trd Cr Txn, Trd Dr Txn, Ext Trf CrTxn, Ext Trf Dr Txn, Int TrfCr Txn and Int Trf Dr Txn fields are configured with the transaction codes which is to be used for the trades and transfers created from the incoming MT54n message. The sub-asset types allowed for custody business are updated in the Allowed Sec Type field.

This application stores the role of a customer. The sender of SWIFT instruction is generally the external asset manager (EAM) for the trades and transfers for institutional custody. In this application, the role of the EAM is flagged as shown below.

The below fields are configured in SEC.ACC.MASTER for the portfolio.

Field Name Description
Custody Port No Stores the alternate portfolio ID that is identified in the settlement instructions (MT 540-543).
Custody Eligible Stores if the portfolio is authorised for custody business.
Eam Id Stores the Eam Id, who has the mandate on behalf of this portfolio and sends the settlement instructions.
Mandate Recd Stores the sub-asset type, for which the EAM has the mandate.
Hold Stmt Freq Holds the time-frequency based on which the MT535 message is generated for this portfolio. Allowed frequencies are daily, weekly, monthly, quarterly, and yearly.
Balance Type Implies the type of balance to be sent in the MT535 message. Allowed values are : Traded, Contractual, and Settled.

The system handles the below Corporate actions (CA) functionality for institutional custody, if the following parameters are configured.

  • Transmission of CA notification to institutional customers (through SWIFT MT564)
  • Transmission of CA narrative to institutional customers (through SWIFT MT568)
  • Receive elections from institutional customers (through SWIFT MT565)
  • Transmission of CA instruction status to institutional customers (through SWIFT MT567)
  • Transmission of CA confirmation to institutional customers (through SWIFT MT566)

This application defines the rules that control the generation of MT564. The rules (if defined) are validated for every incoming MT564. The ID of the record is:

  • COMPANY
  • DIARY.TYPE
  • CUSTOMER

GB0010001*STOCK.DIV*100291

GB0010001*STOCK.DIV*ALLGB0010001*ALL*ALL 

When an incoming MT564 is received or a record in SC.PRE.DIARY is created manually in Temenos Transact, the system checks the SC.CTDY.CA.ADVICE application. The system generates an outward MT564 STP:

  • If the function (Tag 23G) and the processing status (Tag 25D) of the incoming MT564 match with the values In Mt564 Func and In Mt564 Status.
  • If the DIARY.TYPE has Gen Mt564 Method field set to Stp or Gen Mt564 field in SC.PRE.DIARY set to Stp.

If the function and status does not match, then MT564 is not generated.

If In Mt564 Status is set as ALL in SC.CTDY.CA.ADVICE, the MT564 generation works based on the defined function in  the In Mt564 Func field.
  Incoming MT564 SC.CTDY.CA.ADVICE Comment
  Function Status Function Status
Initial Message NEWM PREU NEWM - MT564 should be generated
NEWM PREU NEWM PREC MT564 should not be generated
NEWM COMP NEWM COMP MT564 should be generated
Amendment Message REPL COMP REPL - MT564 should be generated
REPL COMP REPL COMP MT564 should be generated
CANC COMP CANC   MT564 should be generated

The SC.CTDY.CORP.ACTION is set up for a bonus event for the customer 633905 in the company US0010001 as shown in the below screenshot.

In the example provided, the rule set up explains that an MT564 needs to be generated when a MT545 is received with message function as NEWM and message status as COMP. Rules can also be set up to generate MT564 for institutional customers before or after the specific dates.

The CA notification (through MT564) is generated only for institutional customers, if the Gen Ca Advice field is set to 564.

The Gen Mt564 Method field in DIARY.TYPE allows the creation of MT564 message for that event type. This field accepts NO, STP and MANUAL values. The Mandatory Voluntary Flag field in DIARY.TYPE identifies the type of the event (MAND or VOLU or CHOS). If the DIARY.TYPE is for a mandatory event (MAND or CHOS), the Gen Mt564 Method field defaults to STP and if the DIARY.TYPE is a voluntary event (VOLU), the Gen Mt564 Method field defaults to MANUAL. The user can change the defaulted value, if required.

If the Gen Mt564 Method field is set to NO, then MT564 or MT568 is not generated for this event type.

Illustrating Model Parameters

The model parameters for GC module are explained below:

The SC.CUSTODY.PARAM application controls the custody operations. If the record ID of this application is Company Code, then there are different set up for each company.

Parameters Description
Internal Broker Indicates the internal broker used in creation of SEC.TRADE and SECURITY.TRANSFER while processing the incoming MT540-543 messages from institutional customers.
Trd Cr Txn Defines the credit transaction of SEC.TRADE created out of incoming MT541 or MT543.
Trd Dr Txn Defines the debit transaction of SEC.TRADE created out of incoming MT541 or MT543.
Ext Trf Cr Txn Defines the credit transaction of SECURITY.TRANSFER created out of incoming MT540 or MT542.
Ext Trf Dr Txn Defines the credit transaction of SECURITY.TRANSFER created out of incoming MT540 or MT542.
Int Trf Cr Txn Defines the credit transaction code for internal security transfer created out of incoming MT542.
Ext Trf Dr Txn Defines the debit transaction code for internal security transfer created out of incoming MT542.
Allowed Sec Type Defines the allowed security types (asset type or sub-asset type) for custody or account service operations. Defining ALL in this field allows all product groups for this operation to create and authorise respective trades or transfers through incoming MT540-543 messages.
OFS Source Indicates the OFS channel used for creation of trades or transfers.
OFS Version Indicates the OFS version of trade or transfer that are used to create trade and transfers.
Mkt Fee Calc Indicates whether the Market Fee for Security Trades has to be calculated based on Charge Calculation rules (SCDX.CHARGE.PARAMETER) or based on the value in the Incoming Swift. Default setup is to apply from Incoming 54n message.

The SC.CTDY.CA.ADVICE define rules that control the generation of MT564. The rules (if defined in this application) are validated for every incoming MT564. The record id comprises of three components namely Company Code, Diary Type and Customer. User can define rules for specific event and customer.

Parameters Description
Send MT564 Canc Defines whether to generate MT564 when DIARY is reversed.
In MT564 Func Holds the function of incoming MT564 for which outward MT564 needs to be sent.
In MT564 Status Holds the status of incoming MT564 for which outward MT564 needs to be sent.

The 564 Out Func, 564 Out Nb of Days, 564 Out Pri Aft and 564 Out Sel Date fields defines when exactly the outward MT564 message needs to be sent based on the value of 564 Out Sel Date which can hold the values such as Ex Date, Pay Date, Value Date, Reply By Date, Int Reply By Date.

Illustrating Model Products

Model products are not applicable for this module.

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Published on :
Tuesday, May 28, 2024 4:34:35 PM IST