This section will cover Treasury- Hedging.
Derivative Database Requirements:
- Collect foreign exchange, interest rate, and commodity exposure
- Allow for an electronic execution of derivative contract with identified financial institution
- Record derivative contract, identify the derivative type (fx, interest rate, commodity), the Stanley entity that has executed the derivative.
- Establish all necessary FAS 133 documentation - Designation ( Cash Flow, Fair Value, Net Investment), Derivative Terms, Underlying Exposure, Risk to Underlying Exposure, Hedge Objective, Effectiveness Test
- Establish a Hedge Relationship that monitors derivative contract with underlying exposure
- Perform effectiveness test at each balance sheet in compliance with SFAS 133.
- Provide foreign exchange rates, interest rates, etc ( i.e. via Reuters / Bloomberg Connection). These rates will be used as the Company's Balance Sheet and P&L rates
- Allow for MTM calculation of all derivative contracts - including Average Rate Basket Options.
- Provide accounting entries by derivative contract to ensure compliance with SFAS 133.
- Provide for a G/L upload of derivative accounting entries
- Monitor derivative settlement dates, such that the system can upload a cash forecast or payment system allowing for physical payment.
- Use system to allocate unrealized gain or loss on single derivative contracts done on behalf of a group of subsidiaries
- Robust reporting capabilities to analyze collected exposure and derivative portfolio.