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    Designation Types in SAP Hedge Management and Accounting 1704853354

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    Designation Types in SAP Hedge Management and Accounting 1704853354

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    Thirumalai Shanmugam
    8 views6 pages

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    8 views6 pages

    Designation Types in SAP Hedge Management and Accounting 1704853354

    Uploaded by

    Thirumalai Shanmugam

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    of 6

    SAP FSCM TRM (TREASURY AND RISK

    EBOOK MANAGEMENT)

    SAP FSCM TRM -


    DESIGNATION
    TYPES IN SAP
    HEDGE
    MANAGEMENT
    AND ACCOUNTING

    Phone/Whatsapp: +1 (515) 309-7846 (USA)


    Email: [email protected] Website:
    www.zarantech.com

    1 Copyright© 2024, ZaranTech LLC. All rights reserved


    SAP FSCM TRM (TREASURY AND RISK
    EBOOK MANAGEMENT)

    Contents
    Designation Types ......................................................................................................................... 3

    2 Copyright© 2024, ZaranTech LLC. All rights reserved


    SAP FSCM TRM (TREASURY AND RISK
    EBOOK MANAGEMENT)

    Designation Types

    For customers that want to be able to change their exposures throughout the day, and not
    have the hedging relationships created until later in the day, the end-ofday designation setting
    can be used.

    There are two options on when the designation takes place:

    1. As the hedge trade is saved. (EOD Designation indicator is not selected.)


    2. When the reprocessing program is run at the end of day. (EOD Designation indicator is
    selected.)

    It is with the designation step that a hedging relationship is created. With end-of-day
    designation, the hedge is created but a hedging relationship is not created at this point in
    time. The designation, and thus when the hedging relationship is created, happens when the
    Reprocess Transactions Automated Designation report (TPM104) is executed. This
    functionality allows Treasury to change the exposures throughout the day and, thus, take
    several snapshots a day with the Day Reference indicator.

    The Designation Type, shown above, is defined in configuration. It controls how instruments
    are treated during the designation process. The designation process is when the exposures
    and hedges are linked to form a hedging relationship.

    Designation Types control the following:

    3 Copyright© 2024, ZaranTech LLC. All rights reserved


    SAP FSCM TRM (TREASURY AND RISK
    EBOOK MANAGEMENT)

    1. The Designation Type drives how many instruments can be designated together into one
    hedging relationship. The Designation Category has the following options:
    • One Instrument Designation Pattern (one hedging instrument links to one exposure)
    • Two Instruments (Collar) Designation Pattern
    • N Instruments (Swap) Designation Pattern
    2. If end-of-day designation is used, the indicator should be set.
    3. If counter-confirmation is required before a hedging relationship can be released. If this
    indicator is set, the hedging relationship can be released only after the FX transaction has
    been successfully counter-confirmed.

    For Designation Types used in Reference Based Hedging Areas, the Designation Category must
    be set to One Instrument Designation Pattern. This is because, by definition, in Reference
    Based Hedging Areas there is one hedging instrument to hedge one exposure.

    If the indicator to set counter-confirmation as required is selected, be sure to select the status
    of FX transaction to 'Counter confirmed' automatically after receiving the incoming
    confirmation from counter-party. This Automatic Settlement on Counter-confirmation
    configuration setting is at the Define Transaction Type level of the FX trade type.

    Customizing path: Financial Supply Chain Management → Treasury and Risk Management →
    Transaction Manager → General Settings → Hedge Accounting for Positions → Settings for
    Automated Designation of Exposure Items (FX Risk) → Define Designation Types.

    4 Copyright© 2024, ZaranTech LLC. All rights reserved


    SAP FSCM TRM (TREASURY AND RISK
    EBOOK MANAGEMENT)

    The Designation Type which is specified on tab Hedge Accounting II of Hedging Area and is
    assigned in combination with a Hedging Classification and a Hedging Profile.

    In the Hedging Area data on the Hedge Accounting II tab, the Designation Type is assigned for
    a combination of the values of the following criteria:

    • Company code
    • Valuation area
    • Company code on behalf of which the financial transaction is created
    • Hedging classification

    5 Copyright© 2024, ZaranTech LLC. All rights reserved


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