TEMENOS T24

Limits

User Guide

Information in this document is subject to change without notice.

No part of this document may be reproduced or transmitted in any form or by any means,
electronic or mechanical, for any purpose, without the express written permission of TEMENOS Holdings NV.

Copyright 2005 TEMENOS Holdings NV. All rights reserved.

Limits

Table of Contents
Introduction.............................................................................................................................................. 4
Application Overview ........................................................................................................................... 4
Setting up the system .......................................................................................................................... 4
Overview .......................................................................................................................................... 4
Application Design ............................................................................................................................... 6
Credit Checking................................................................................................................................ 6
Simple customer credit limits ........................................................................................................... 7
Other features of simple limits.......................................................................................................... 9
Customer hierarchy and customer groups - Liability number ........................................................ 10
Individual customer limits within a customer group........................................................................ 12
Limit Products................................................................................................................................. 13
Defining valid limits products using LIMIT.PARAMETER .............................................................. 13
Single product limits ....................................................................................................................... 14
Limit products hierarchy - products and sub-products ................................................................... 16
Multi-level Sub-Products ................................................................................................................ 18
Further distinction between Bank and Non-Banks......................................................................... 19
Reducing and non-reducing limit products..................................................................................... 21
Limit to one account ....................................................................................................................... 21
Time bands..................................................................................................................................... 21
Limit utilisation by percentage of contract ...................................................................................... 22
Percentage Allocation Schedule .................................................................................................... 23
Other features of the LIMIT application.......................................................................................... 27
Limit grades and percentage allocation ......................................................................................... 29
Limits and Collateral....................................................................................................................... 30
Fixed and variable limits................................................................................................................. 30
Specifying the types of collateral that may be used as security..................................................... 32
Partially secured limits.................................................................................................................... 34
Collateral Required Processing...................................................................................................... 35
Special limit processing for Foreign Exchange .............................................................................. 37
Limit Netting ................................................................................................................................... 38
Revaluation of Limits ...................................................................................................................... 39
Conversion of Foreign Currency Amounts to Limits ...................................................................... 39
Allowed currency and Allowed amount .......................................................................................... 39
Scheduled reduction of limits ......................................................................................................... 39
Scheduled increase of limits .......................................................................................................... 39
LIMIT.PARAMETER - General parameters for the Limits system ................................................. 40

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LIMIT.CHANGE.............................................................................................................................. 43
LIMIT.CHANGE.HIST..................................................................................................................... 46
Sub-allocations - the LIMIT.SUB.ALLOC application..................................................................... 46
Limit Range .................................................................................................................................... 48
Country limits - Monitoring credit exposure to countries ................................................................ 48
Defining groups of countries for limits monitoring .......................................................................... 49
Splitting a limit across different countries....................................................................................... 50
Currency limits - Monitoring credit exposure to currencies ............................................................ 51
Commodity limits - Monitoring exposure to industries ................................................................... 51
Charging for unutilised limits .......................................................................................................... 52
Reporting........................................................................................................................................ 52
General Errors and Exceptions report............................................................................................ 53
Limits due for review Report .......................................................................................................... 54
Credit Limits Expiring Report ......................................................................................................... 55
Expired Limits report ...................................................................................................................... 55
Moved Liabilities report - reporting changed liability numbers and groups.................................... 56
Report............................................................................................................................................. 56
Central Liability Ledger................................................................................................................... 57
Enquiries ........................................................................................................................................ 57
Overview of Input and Processing ..................................................................................................... 59
Selection of Limit Product .............................................................................................................. 59
Cross Limits.................................................................................................................................... 64
Product Limit References ............................................................................................................... 65
LIMIT.CROSS.PARAM................................................................................................................... 66
Cross Limit References .................................................................................................................. 66
Sub-product Limit References........................................................................................................ 67
Setting up the Limit References and Limit Parameter ................................................................... 67
Input of LIMITs in a Cross Limit Structure...................................................................................... 69
Example 1 ...................................................................................................................................... 70
Example 2 ...................................................................................................................................... 81
Independent Sub-product Limits .................................................................................................... 87
Example 1 ...................................................................................................................................... 88
Example 2 ...................................................................................................................................... 89
LIMIT.CROSS.USAGE................................................................................................................... 90

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Introduction
Application Overview
The LIMIT system controls credit risk against customers and markets. It monitors the availability and
utilisation of credit limits in the following categories:

• Customers and groups of customers

• Countries and groups of countries
• Commodities
• Currencies

Customer limits are monitored in real-time during T24 on-line transaction processing. Other limits are
monitored and reported on during the T24 overnight batch.

Limits may also be reported as off-balance-sheet items in CRB reports.

The LIMIT system integrates closely with the COLLATERAL application.

Setting up the system

Overview

Credit limits are held by customer and by product. In the simplest case a LIMIT might be held for one
product with an individual customer. For example we might decide to limit placements with ABC Bank
to no more than 50M USD. If we were to attempt to input a placement, which meant that this LIMIT
would be exceeded then, an override would be required at deal input.

More complex limits may be specified than this. Limits may be held at two levels by customer -
individual and liability group - and at twelve levels by product - ten levels of sub-product, product, and
global. Thus an individual trade might update as many as six limits as shown below:

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Figure 1 - Overview of the Limit Structure

In this example we have made an unsecured loan to ABC Ltd of 3 million USD. ABC Ltd is part of the
larger group, ABC International and we are monitoring limits at both company and group levels.
Unsecured loans are a sub-product within Loans and we are monitoring limits at both levels. Finally
we have chosen to set a limitation on all business with ABC Ltd and with ABC International and these
limits are held at the Global level.

Consequently the unsecured loan has updated six limits. If any LIMIT had been exceeded an
override would have been required during input of the loan.

Credit limits are held on the LIMIT application. Sub-products, products, and global definitions are
held on the LIMIT.REFERENCE application. Customers and customer liability definitions are held
on the CUSTOMER application. Finally the LIMIT.PARAMETER application defines various high
level parameters concerning the application and also links contracts and accounts to
LIMIT.REFERENCE.

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Figure 2 - Limit Parameters

Limits may also be set to monitor exposure against currencies, countries, and industries. These limits
are monitored overnight.

Application Design
Credit Checking
A credit check is made whenever a debit transaction is validated or is validated and authorised at the
same time.
An option is available to set credit checking for an account against working balance and cash flows or
available balance via the CREDIT.CHECK field in ACCOUNT.PARAMETER, the options are as
follows:
• Null or WORKING - check overdraft and cash flow
• AVAILABLE - perform an available funds check
An option is also available to be able to decide with regards to customer limits, whether to use a Value
Dated Balance or a Working Balance depending on the value input in VDATE.BAL.CHECK field in
ACCOUNT.PARAMETER.
• No - will only include same day value transactions
• Yes - will include forward value transactions
If CREDIT.CHECK is set to AVAILABLE then all credit checks will be made against the Available
Balances and Cash flows and Working Balance will be ignored although the Cash flows movements
are still populated to the account. These checks will be made on the value date of the transaction of all
of the accounts linked to the limit and will then check through all available dates and balances against
the calculated online limit. For each date the system will perform a check and raise an override if
necessary.

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Simple customer credit limits

A LIMIT may be recorded against any CUSTOMER using the LIMIT application.

A simple LIMIT consists of three components: the id of the CUSTOMER to whom the credit line is
available, the ‘product’ of the LIMIT which is the type of business products that can utilise this LIMIT
and a serial number enabling more than one LIMIT of the same type to be maintained for a
CUSTOMER.
For example, we wish to restrict our lending exposure to the CUSTOMER Bell to 25 million USD.

Figure 3 Limit Record

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The id of this record is constructed as follows:

Figure 4 Limit Construction Record

T24 will check this LIMIT whenever a placement is input to the system to ensure that the placement
will not cause the LIMIT to be exceeded. The LIMIT is shown on the LIAB (for liabilities) ENQUIRY
below. A placement of 20M USD has already been made under this LIMIT, leaving an available
amount of 5M.

Figure 5 - Enquiry - LIAB

If we now attempt to make a further placement to the customer of 10M USD the following warning is
displayed showing that the LIMIT is about to be exceeded by 5 million US dollars:

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Figure 6 MM.MONEY.MARKET Screen showing Limit exceeded

Note that in the warning message the LIMIT.REFERENCE of 3010 has been replaced by its
mnemonic (MMPL) as specified on the LIMIT.REFERENCE record.

Other features of simple limits

Some other features of simple limits on the LIMIT application are:

• LIMIT records are specified in specific currency but may be utilised in another. For example we
may set a loan LIMIT as 30M US dollars but this LIMIT could be utilised by loans of 10M GBP.
The utilisation amount will by default be converted at the prevailing middle exchange rate so let us
assume that the GBP/USD exchange rate is 1.55. The utilisation would therefore be 15.5M USD.

• Normally a LIMIT may be utilised in any currency. However this may be restricted using the
ALLOWED.CCY and RESTRICTED.CCY fields.

• A LIMIT is only available from the ONLINE.LIMIT.DATE to the EXPIRY.DATE. Both of these
dates can be maintained if a LIMIT extension is approved.

• The LIMIT has a review date and frequency set using the REVIEW.FREQUENCY field. It will be
automatically included on the limits due for review reports on the specified dates.

• The bank can initially input a LIMIT, before the client has accepted the facility. In this case an
OFFERED.UNTIL date must be input.

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• A facility to restrict utilisation of the Limit during its tenure can be done through the field
LAST.DRAW.DATE. System generates an override when the Limit is hit beyond the date entered in
this field.

• An ADVISED.AMOUNT may be entered. This is not normally used for processing but notes the
amount of the LIMIT that has been advised to the client. See LIMIT.PARAMETER field
ADDITIONAL.VAL for details of using this amount (or the internal amount) in overrides.

• A LIMIT may be marked as unavailable using the AVAILABLE.MARKER. It will not then be
available for use. This feature may be useful if a LIMIT is temporarily withdrawn.

• Normally a LIMIT may be utilised in any company. However this may be restricted using the
ALLOWED.COMP and RESTRICTED.COMP fields.

Customer hierarchy and customer groups - Liability number

In the simple example above, a single credit LIMIT was allocated to a single CUSTOMER. Often,
however, a LIMIT will need to be allocated to a group of customers. The most common example of
this is where we have a business relationship with various companies within a group. In this case we
may wish to manage our credit risk exposure to the entire group. This is achieved using the ‘customer
liability number’ feature.

To use this feature, one member of the group of customers must be identified as the lead
CUSTOMER. This will usually be the head office of the group of companies. The
CUSTOMER.LIABILITY field on all the CUSTOMER records must then be set to the number of this
lead CUSTOMER. The structure will look like this:

Figure 7 Customer hierarchy and customer groups

In this example the liability number is 100094, the CUSTOMER number of the head office. Limits are
then granted to this liability number in exactly the same way as we granted the LIMIT to the single
CUSTOMER in the above example.

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Any business conducted with any of the four customers will now update two LIMIT records - the
LIMIT at the CUSTOMER level and the LIMIT at the liability level. A warning will be given if either
LIMIT is being exceeded however it is not necessary to specify both limits. This means that if you
only wish to maintain a LIMIT at the group level then this is the only one that will be entered. T24 ill
automatically maintain a LIMIT record at the CUSTOMER level recording the utilisation but will not
validate contracts against that LIMIT. It is maintained in case you wish to set a LIMIT at this level at
a later date.

If there were a further level in the hierarchy, the same single liability number mechanism may still be
used. Thus:

Figure 8 - Further level of Customer hierarchy and customer groups

In this case any business booked with GN Reprocessing Limited would be recorded twice - once
against GN Reprocessing Limited and once against General Nuclear Head Office.

The liability number is defined in the CUSTOMER application in the field CUSTOMER.LIABILITY. A
null value implies that a CUSTOMER is not a member of a liability group.

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Individual customer limits within a customer group

In the above example, any CUSTOMER within the group has access to the entire LIMIT for the
group. For example if we have set a LIMIT to our exposure to General Nuclear Group at 80 million
US dollars this entire amount could be lent to General Nuclear France. We may not wish to allow this.
For example we might wish to restrict our exposure to General Nuclear France to just 25 million out of
the 80. This may be achieved by inputting a second LIMIT against the individual CUSTOMER
General Nuclear France.

The id of this second LIMIT record will be in the following format:

Figure 9 Individual customer limits within a customer group

With this structure, if we advance a loan to General Nuclear France, both LIMIT records will be
checked and drawn down - the LIMIT for General Nuclear France and the LIMIT for the General
Nuclear group. If we then lent 18M USD to the subsidiary the resulting LIMIT records would look like
this:

Figure 10 - Limit Record Structure

If we now attempted to lend a further 10 million USD to General Nuclear France then the
CUSTOMER level record would be exceeded but not the group level record.

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Limit Products

The second dimension to T24 limits is the product. A LIMIT product is an area of business for which
the user wishes to set limits. LIMIT products are defined on the LIMIT.REFERENCE application
and are linked to the underlying business using the LIMIT.PARAMETER application.

Defining valid limits products using LIMIT.PARAMETER

The LIMIT products that are valid for a particular contract or ACCOUNT are defined on the
LIMIT.PARAMETER application.

Because LIMIT products are fully user-defined (on LIMIT.REFERENCE), the mechanism for
linking contracts and accounts to these products also needs to be fully user-defined. It is based upon
any characteristic of the contract or ACCOUNT including, if required, local reference fields.

The parameter defines which LIMIT products are valid for a contract or ACCOUNT, it will default the
LIMIT product if no input is made.

Figure 11 Limit Parameter Structure

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Figure 12 Limit Parameter Screen

The above screenshot shows the section of LIMIT.PARAMETER applicable to the

MM.MONEY.MARKET (MM) application.

If an MM contract has a CATEGORY of 21076 then the valid LIMIT product is 3010.
For loans two LIMIT products may be valid, a secured loan and an unsecured loan. The user will
have to distinguish between the two when the loan is input. If no distinction is made then T24 will
apply a default of the first applicable product.

If the loan does not meet either of the above criteria then the LIMIT product corresponding to
the”parent” product will be used. T24 insists that there is always a default specification for each
application being used. It can appear anywhere on LIMIT.PARAMETER. All other specifications for
the application are checked in turn working down the LIMIT.PARAMETER record. When a match is
found the checking stops

Single product limits

Different LIMIT records can be specified for different banking products. For example LIMIT records
may be specified for term loans and overdrafts. Different types of LIMIT products are defined using
the application LIMIT.REFERENCE. The following record shows a simple LIMIT.REFERENCE
for placements.

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Figure 13 Limit Reference Screen

The record includes a description of the LIMIT product and a short mnemonic for use in error
messages.

The LIMIT.REFERENCE forms part of the key to the LIMIT application. A LIMIT on 20 million US
dollars on placements with Banque National de Paris would appear in following screenshot:

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Figure 14 Limit Record

Limit products hierarchy - products and sub-products

Some products may require a hierarchy of limits. For example you may wish to specify an overall
LIMIT for foreign exchange but within that a separate LIMIT for forward FX. This may be done within
the LIMIT.REFERENCE application by specifying sub-products. The construction of the ID of the
LIMIT.REFERENCE record shows whether it is a product or sub-product as follows:

• Product format 000nn00 e.g. 0004500

• Sub Product format 000nnnn e.g. 0004511
• Multi-level format 000nnnn e.g. 0004515*

* Also requires use of SUB.PRODUCT.LEVEL field. (See Multi-level Sub-Products section for a more
detailed explanation)

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The following diagram is an example:

Figure 15 Limit products hierarchy - products and sub-products

In the above diagram, foreign exchange is divided into spot, forward and swaps sub-products but
placements are not sub-divided.

Limits can be maintained at any level in the structure and will be updated automatically. In the above
structure if we input a spot FX deal it would update both LIMIT 1001 and 1000.

Contracts and accounts must always be booked at the lowest level. Thus in the above structure we
could not book an FX deal against LIMIT 1000.

If limits are being maintained at sub-product level it is not necessary to input limits at both levels. For
example, suppose we wish to set a LIMIT with Banque National de Paris (BNP) of 100M USD for all
foreign exchange and out of this no more than 20M USD should be allowed for forwards. We would
need to enter two LIMIT records:

Figure 16 - Limit Record Structure

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If entering into a forward contract with BNP for 12M USD then both LIMIT records would be updated:

Figure 17 - Limit Record Structure

If, however, a spot FX deal for 30M were done, then only the product level would be checked.
However a new LIMIT would be automatically created for the sub-product level enabling us at a later
date to activate a LIMIT for spot deals only:

Figure 18 - Limit Record Structure

Multi-level Sub-Products
A further nine levels of sub-product can be defined allowing the limit structure to be more complex.
These sub-products are created by establishing a link between the lowest level sub-product and its
parent right through to the Product itself. The field SUB.PRODUCT.LEVEL can be set to a value of 1 to
9 with 9 being the lowest level.
In the illustration below a structure shows 2 extra sub-product levels being used.

Figure 19 Multi-level Sub-Products – showing two extra sub-product levels

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This could be used to create a LIMIT structure where the Product is FOREX, the next level being
SPOT and FORWARD deal types.

Further distinction between Bank and Non-Banks

Lastly, the deal grouping (say Euro currencies versus Non-Euro) could then be distinguished.

The user is required to enter the lowest level LIMIT.REFERENCE first, setting the
SUB.PRODUCT.LEVEL to 2 (per the above example), then its immediate parent is input which
references the child and has its own SUB.PRODUCT.LEVEL set to 1.

Then the standard sub-product is entered naming the parent LIMIT.REFERENCE. Lastly the
product itself and its related sub-products are entered. The lowest level sub-product can then be
added to LIMIT.PARAMETER with the decision criteria, which trigger that kind of deal.

Limit products hierarchy - Global Limits.

A higher level of LIMIT hierarchy may also be used if required.

Should the user wish to restrict overall exposure to Banque National de Paris (BNP) to 250M USD
equivalent, irrespective of the type of business, this can be achieved by making use of a global LIMIT.

A Global LIMIT is enabled using the LIMIT.REFERENCE application. It has an id in the range
10000 to 9990000 (and therefore is above product and sub-product limits). An example of a global
LIMIT for BNP is shown in the screenshot below.

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Figure 20 - Example Global LIMIT for BNP

In this example any foreign exchange or placement contracts with BNP would update the usual
product and sub-product LIMIT records and would also update this global LIMIT.

Global limits can be restricted to only certain types of product. For example all treasury products could
be included in the global LIMIT but corporate products could be excluded.

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Reducing and non-reducing limit products

A LIMIT may be reducing or non-reducing. This is also known as non-revolving or revolving. If a

LIMIT is reducing then the amount available will not be reinstated when a repayment is made. If a
LIMIT is non-reducing then the available amount will increase as deals mature or repayments are
made. However when an account limit is a reducing type, limit will be reduced to the extent of credit
transaction affecting the debit balance in the account. This will happen upon authorization of such
transaction. Reversal of such credit transaction will not restore the LIMIT.

This specification is made on the LIMIT.REFERENCE application. This means that the definition is
made by product or sub-product and not by individual LIMIT.

Limit to one account

If single limit field in ACCOUNT is set to “Y” then only one account can be attached to a limit record;
if set to “N” then multiple accounts are allowed to utilise a single limit. Single limit Y/N can be defaulted
from ACCT.GROUP.CONDITION using single limit default field. Single limit in account can be
used independently without setting up ACCT.GROUP.CONDITION.

Time bands

This facility enables different LIMIT amounts to apply to contracts with different maturity dates. This is
based on the concept that the further forward the maturity date of a transaction, the greater the
associated risk. The whole LIMIT is therefore available for the most immediate time slice and the
amount decreases as the maturity increases.

Example:

A Money Market line of $100 million may be sub-divided into $60 million for maturity within 30 days,
$30 million within 90 days, and the remaining $10 million within 180 days.

To enter the above into the LIMIT application, the overall $100 million should be entered with a
'blank' time code. The associated multi-valued fields should be expanded to enter the sub-division as
follows:

Figure 21 Time band sub-division

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If a transaction exceeds the specified period (in this case 180 days) and the referral message is
overridden, the system will reduce the amount available in the latest band specified (180 days).

It should be noted that when a band is not fully utilised it becomes available for use at lower levels. In
the example, if only $8 million were used in the 180-day period, $32 million would be available for 90-
day contracts.

Time bands can only be entered on the LIMIT application if its product (as defined on
LIMIT.REFERENCE) has the appropriate FX.OR.TIME.BAND specification.

Limit utilisation by percentage of contract

In SWAP contracts in particular, you may wish to be able to specify the percentage of the contract
value, which will be used to decrease a customer limit. It is possible to specify a percentage against
each year of the contract that is outstanding.

Figure 22 Limit Reference Application specifying percentage against each year of the contract that is
outstanding

The LIMIT.PERCENTAGE is a flat percentage applied to all contracts under the limit type.

The MATURITY.PERIOD is a multi-valued field associated with the field PERCENTAGE. It indicates an
interval of time for which a percentage will be used to determine the limit utilisation. The intervals can
be Days, Weeks, Months and Years. It is not possible to use a mix (such as Days and Months) to
derive the final schedule.

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The field PERIOD.BAND.LEVEL controls the method used to derive the limit utilisation. This field is
used to indicate whether a single percentage from a particular band is used (Level), or whether it is
split into several different bands (Banded).

The fields PERCENTAGE.CAP and PERCENTAGE.FLR identify a loaded capped percentage and floor
percentage respectively.

It is also possible to derive the limit utilisation from an external routine. The name of this subroutine
should be entered into the field LIMIT.SUBROUTINE. This field may only be used when a single band
has been identified. Input is validated against the program file PGM.FILE (Type ‘S’ record) and
UniVerse VOC file.

When more than one MATURITY.PERIOD is used then the values must be ascending. If more than
one period is present and the field PERIOD.BAND.LEVEL has been given the option ‘LEVEL’ then the
percentage used will be selected from the relevant period (bands will be inclusive).

Percentage Allocation Schedule

This section contains a number of example schedules and diagrams. They demonstrate how to define
percentage allocation using the changed LIMIT.REFERENCE application.

Example i (Banded - Fixed)

3 year SWAP contract for 100M GBP.

On signing: Total: 9M GBP (Banded).

Figure 23 -Define percentage allocation using the changed LIMIT.REFERENCE application

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After 1 year: Total: 7M GBP (Banded).

Figure 24 - Define percentage allocation using the changed LIMIT.REFERENCE application

After 2 year: Total: 5M GBP (Banded).

Figure 25 - Define percentage allocation using the changed LIMIT.REFERENCE application

Example ii (Banded - PERIOD)

1 year FOREIGN.EXCHANGE contract for 50,000 USD

On signing: Total 2750 USD (Banded)

Figure 26 - Define percentage allocation using the changed LIMIT.REFERENCE application

Example iii (Level – Pro-rata)

15 month FOREIGN.EXCHANGE contract for 50,000 USD

On signing: Total 12548 USD (Level Pro-rata)

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Figure 27 - Define percentage allocation using the changed LIMIT.REFERENCE application

2 months (30 + 31) to maturity: Total 4178 USD (Level Pro-rata).

Figure 28 - Define percentage allocation using the changed LIMIT.REFERENCE application

1 month to maturity: Total 2055 USD (Level Pro-rata)

Figure 29 - Define percentage allocation using the changed LIMIT.REFERENCE application

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The effects of LIMIT.BAND.LEVEL and PERC.CALC.BASIS on the percentage of deal amount

deducted from available limit: -

Figure 30 - Define percentage allocation using the changed LIMIT.REFERENCE application

For FIXED calculation the percentages in MAT.PERIOD.PERC are direct percentages of the deal
amount, but for PERIOD and PRORATA the percentages are percentages per annum and are
multiplied by the number or fraction of years to maturity before being multiplied by the deal amount to
give the reduction in available limit.

The percentage cap and floor are direct percentages applied as maximum and minimum.

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Other features of the LIMIT application

Restricted customers

If a LIMIT is being set for a group of customers (at liability level as described earlier) it is possible that
we may not wish to allow some within the group to make use of the LIMIT. For example we may have
made a LIMIT on forward FX with a particular multi-national company but we may not want to do any
forward FX with one of its subsidiaries. The ‘restricted customers’ feature on the LIMIT application is
provided for this purpose

Use of this field is made in the following way. Suppose the following Liability group exists:

Figure 31 Restricted Customers

If CUSTOMER Numbers 564327 and 985100 are entered to RESTRICTED.CUST on the LIMIT
application, the LIMIT will be available only to UK Bank (London) and UK Bank (Caracas).

If a value of *ALL is specified in the field RESTRICTED.CUST, then the LIMIT would be restricted to
all Customers, and if no value is specified in the field, then it would not be restricted to any Customer.

Allowed Customers

Similar to specification of Restricted Customers, it is possible to specify the Allowed Customers, when
a LIMIT is being set for a group of Customers. The definition of Allowed Customers and Restricted
Customers are mutually exclusive i.e. it would not be possible to specify both Allowed Customers and
Restricted Customers.

In the above example, if CUSTOMER Numbers 123456 and 700346 are entered to ALLOWED.CUST
on the LIMIT application, it would have the same effect i.e. the LIMIT would be available only to UK
Bank (London) and UK Bank (Caracas). The specification of Allowed Customers could be used in a
Cross Limit structure for automated creation/modification of Limit records (for further details, please
refer to the Section on Cross Limits). However, Allowed Customers could be also used in normal
Limits. If no value were specified in the field ALLOWED.CUST, then the LIMIT would be available to all
Customers.

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Offsetting of limits with credit balance accounts

It is possible within the limit function to use credit balances on accounts to offset lending on debit
balance accounts. The overall net balance on all accounts is used in determining whether a limit has
been exceeded. Lending contracts can be included within the limit structure, so that credit balances on
accounts can be offset against a lending product, or a combined account and lending product limit.

To do this the ALLOW.NETTING flag on the LIMIT record should be set to YES and the
ALLOW.NETTING flag on the ACCOUNT record for all accounts included in this limit, which can be
used for offset, should also be set to YES.

Figure 32 Account Input Record

Figure 33 Limit Input record

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The overdraft is USD 120,000, but the limit of USD 100,000 is not exceeded because the credit
balance of USD 50,000 from another account is being used to offset the debit balance. Should the
credit balance be reduced below USD 20,000 or removed from offsetting facility overrides will be
produced to alert the user that the limit will become in excess.

Figure 34 Enquiry: LIAB

N.B The use of offsetting of debit balances with credit balances in this way, does not imply any legal
right of offset, it is used for limits only.

Creation of limits in Multi Company

Limit input and Authorisation is allowed from any company within a multi company set up. However
the currency in which the limits can be created is restricted to the currencies available in the customer
company.

Limit grades and percentage allocation

The LIMIT application has a manual facility to sub-divide the limit the credit status of the customers to
whom the LIMIT is against. The credit status is held on the CUSTOMER.STATUS application.

Two fields are provided for this purpose, LIMIT.GRADE and GRADE.PERCENT, linked in a multi-value
group. If no input is made then the fields are defaulted to the customer status of the liability customer
and 100%.

This facility is for information only. The fields are manually maintained and the results are available for
enquiry.

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Limits and Collateral

Items of COLLATERAL may be linked to LIMIT records. For example a mortgage may be linked to
a loan LIMIT.

The link can either be used for information only, a ‘fixed’ LIMIT, or the value of COLLATERAL can
be used to determine the availability of the LIMIT, a ‘variable’ LIMIT. The setting of fixed or variable
is on the LIMIT record.

The link is made by entering the LIMIT id on the COLLATERAL.RIGHT record as shown below:

Figure 35 Limits and Collateral Structure

For further information on the COLLATERAL system see its chapter of this user guide.

Fixed and variable limits

When a LIMIT is linked to COLLATERAL the LIMIT must be defined as either fixed or variable in
the FIXED.VARIABLE field on the LIMIT record.

Variable means that the available amount of the LIMIT will correspond to the current value of the
COLLATERAL. Fixed means that the LIMIT is unaffected by the value of the COLLATERAL and
the link is being made for information only.

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Example:

A LIMIT is granted up to an overall maximum of GBP 100,000.00. If this facility is unsecured (in
terms of the T24 COLLATERAL Module), the LIMIT record appears as follows:

Figure 36 Collateral Examples

If, instead, the facility requires security, it must be indicated by the user whether the online LIMIT is to
be system-maintained (variable) or set to the full maximum total allowed and fixed at that level. The
current value of this security is, in either case, indicated by the system. In this example, there is a
mortgage, currently valued at 80,000.00.

If the LIMIT is fixed, the record appears as follows:

Figure 37 Collateral Examples

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If the LIMIT is variable, the record appears as follows:

Figure 38 Collateral Examples

An upper limit may be set in the MAXIMUM.TOTAL field. For variable LIMIT records this means that if
the value of the COLLATERAL exceeds this maximum no more than the MAXIMUM.TOTAL will be
granted.

Specifying the types of collateral that may be used as security

Normally the full value of all items of COLLATERAL linked to a LIMIT will be used as security
against that LIMIT. However there may be a requirement to set a ceiling on the security provided by
certain types of COLLATERAL. For example if cash and shares are pledged as security against a
loan LIMIT of 100,000 GBP, the cash may be accepted up to its full current value but the shares may
be limited to only 40,000 GBP. If the value of the shares is at any time greater than 40,000 GBP, the
LIMIT application will not recognise the excess amount.

This specification is achieved through the COLLATERAL.CODE and MAXIMUM.SECURED fields on the
LIMIT application.

Example:

A LIMIT is granted up to an overall maximum of GBP 100,000.00. The LIMIT is secured and
variable. The current value of the underlying COLLATERAL is exactly equal to the overall total limit.
It is made up of a mortgage, currently valued at GBP 80,000.00, plus guarantees worth GBP
20,000.00.

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If field COLLATERAL.CODE is left blank, the LIMIT record appears as follows:

Figure 39 Collateral Examples

If however this field has been used to restrict the amount of any guarantees, which are acceptable as,
COLLATERAL to GBP 10,000.00, the LIMIT record appears as follows:

Figure 40 Collateral Examples

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Partially secured limits

If a LIMIT is partially secured then the MAXIMUM.UNSECURED field may be used to set the ceiling to
the amount that may be unsecured.

Example:
A LIMIT is granted up to an overall maximum of GBP 100,000.00. The LIMIT is secured and
variable. The current value of the underlying COLLATERAL is exactly equal to the overall total limit.
It is made up of a mortgage, currently valued at GBP 80,000.00, plus guarantees worth GBP
20,000.00. However, the amount of any guarantees which are acceptable as COLLATERAL has
been limited to GBP 10,000.00
If there is no MAXIMUM.UNSECURED amount, the LIMIT record appears as follows:

Figure 41 Collateral Examples

If an unsecured portion of the LIMIT is to be allowed, it can be specified in this field. If, for example,
there is GBP 5,000.00 available under the limit without security, the limit record appears as follows:

Figure 42 Collateral Examples

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Collateral Required Processing

Collateral Required Amount

Collateral required amount is used to control minimum collateral required when fixed type limits are
used. In case of fixed limits type, the LIMIT is unaffected by the value of the COLLATERAL and the
link is being made for information only. If minimum collateral is to be brought for availing of the LIMIT
then this field could control required collateral. If the required collateral is not provided then during
utilisation of the limit an override is generated. If multiple collateral is entered with collateral required
amount and not provided then multiple overrides are generated. These overrides can be overridden
for utilising the LIMIT. This facilitates with additional information to the user.

Figure 43 Limit Record showing Collateral Required Amount

Collateral Required Percentage

Collateral required can be controlled with collateral required amount or collateral required percentage.
If collateral required percentage is given then collateral required amount is automatically populated in
fixed type limits. Percentage can be defined on the basis of internal amount. Collateral required
percentage in variable limits alters the secured amount of the respective collateral right. E.g. If
collateral value is 1,000,000 and collateral required percentage is defined as 200% then secured
amount for the related collateral right will populate 500,000.

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Figure 44 Default of Online Limit from a % of an Account Balance

Up to Period

Collateral required can be defined for a future period with this field. This field “Up To Period” can be
used as a schedule for changing the collateral required amount. Valid future date can be input in this
field. Date cannot exceed the limit expiry date. If a date is entered in up to period field, then during the
Close of Business processing the collateral required amount and percentage is replaced with period
amount and period percentage fields. Up to period, period amount and period percentage form a sub
value set; numerous schedules can be defined for changing the collateral required amount and
percentage.

Period Amount

This field holds the collateral required amount for a future date. When “Up To Period” is processed
then the amount in this field replaces the amount in the “collateral required amount”.

Period Percentage

This field holds the collateral required percentage for a future date. When “Up To Period” is processed
then the value in this field replaces the value in the “collateral required percentage”. Either period
amount or period percentage can be entered; both cannot be entered at the same time.

All the above fields are a part of the associated multi value set along with collateral code and
maximum secured amount.

Online Update

This field controls online update of fed (cash) type of collateral. If cash collateral such as AC, LD, MM,
SC, FD, MD, LCE & LCI are attached to a limit record; any change in these collateral values are
updated during the Close of Business process. If any collateral value is to be updated online then this
field is to be marked as "Y". (COLLATERAL.TYPE record of the COLLATERAL should also be
marked "Y" in the online update field) In such cases the collateral is recalculated when the limit

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reference is drawn/utilised, if the field is marked "N" or left blank then no online update is performed.
On line update of collateral can be used only in variable type limits.

Figure 45 Limit Record: Setting Online Update

Clean risk

An additional LIMIT may be monitored for settlement of all contracts. The clean risk limit is specified
on the LIMIT record and is the maximum total value of contracts that may mature on any one day.

To enable clean risk FX.OR.TIME.BAND on LIMIT.REFERENCE should be set to FX.

A LIMIT.REFERENCE with FX.OR.TIME.BAND field set to FX can only be used in

LIMIT.PARAMETER for the FX and MM applications.

In the case of Money Market contracts only the maturity event of a maturing loan will be included.

Special limit processing for Foreign Exchange

The bought side of FX contracts is used in the LIMIT application. The bought amount is converted to
the currency of the LIMIT and monitoring is performed in the usual way.

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Limit Netting
Foreign exchange limit netting is optional, and can be activated or deactivated when required. If FX
limit netting is active, then all foreign exchange deals, which are equal and opposite, will be netted.

An equal and opposite deal is defined as follows:

• Value dates are the same

• Counterparty is the same
• Both currencies are the same with the buy and sell reversed e.g.:
– Deal 1 buy currency A sell currency B
– Deal 2 buy currency B sell currency A

Assume that the local currency and limit currency is USD, and that the currencies involved in the
trades are USD and GBP, with a USD amount of 1,000,000.
If the current available limit for customer A is $5,000,000 and two equal and opposite deals take place
for the same customer, for the same value date, at the current mid revaluation rate then the available
limit will still be $5,000,000.
If limit netting is not enabled then the available limit will be $3,000,000
The clean risk limit will not be affected by this netting; it would be reduced by the total value of the buy
amounts of the two deals converted (by default) at the current mid revaluation rate into the limit
currency, i.e. by $2,000,000.

To enable FOREX limit netting the NET.OUTSTANDING flag on LIMIT.CHANGE should be set to Y.
To disable FOREX limit netting the NET.OUTSTANDING flag on LIMIT.CHANGE should be set to
N. This flag can only be set to the opposite value to the NET.OUTSTANDING flag on the
LIMIT.PARAMETER SYSTEM record.
The actual change will take place during the next T24 batch run.

It is also possible to allow more sophisticated updates to FOREX limits.

The field FX.ROUTINE in LIMIT.PARAMETER will allow the definition of a routine that will
recalculate the impact of changes in the underlying unrealised profit/loss of the netted positions.
These routines can examine the LIMIT exposure of paired or multiple (e.g. assume the following
transactions; CHF/EUR-EUR/USD-USD/CHF) FOREX positions and apply the changes to LIMIT
accordingly.
LIMIT.NETTING.PARAM will allow the definition of which NETTING.TYPE to apply
(NONE/MULTI/PAIRED), the RATE.USED (SPOT/FWD) and the weighting to apply to the
LIMIT (REPL.PERC/PROFIT.PERC).
A new live file LIMIT.FX.PROFIT.LOSS has been supplied to support the calculations performed by
these routines.

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Revaluation of Limits

The LIMIT system will re-value all LIMIT amounts automatically at a user-defined frequency
specified on the LIMIT.PARAMETER application.

The latest middle exchange rate for each currency is used and all LIMIT utilisations are re-valued.
Any instances where the revaluation has now caused excess are reported.

Conversion of Foreign Currency Amounts to Limits

By default foreign currency amounts are converted to the local currency using the mid revaluation rate
form the CURRENCY table. It is, however, possible to define a preferred rate that the system should
utilise to perform this conversion. To enable this functionality the field UPDATE.RATE in
LIMIT.PARAMETER needs to be set to “YES”. The system will the call the relevant record in
LIMIT.REFERENCE and evaluate the value held in CONVERT.RATE. The available values will
allow the conversion of foreign currencies to the local currency utilising the mid rate, the buy rate or
the sell rate held on the CURRENCY table.

Allowed currency and Allowed amount

In a multi currency environment it may be necessary to monitor utilisation of LIMIT in certain

currencies with a ceiling amount for each currency. For this purpose associated multi value fields
ALLOWED.CCY and ALLOWED.AMT have been provided. When the LIMIT is hit in a defined currency,
the system will provide an override in case the outstanding amount in the currency exceeds the
ALLOWED.AMT. An online enquiry in this regard is also provided. This is listed under enquiries.

Scheduled reduction of limits

A facility exists to schedule the repayment of limits. The fields REPAY.FREQ, REPAY.NUMBER, etc.
on the LIMIT application are used to specify the repayment schedule and amounts. No processing is
performed on these fields when the field REDUCING.SCHED is left blank. Alternatively, the field
REDUCING.SCHED can be used to indicate whether the LIMIT repayment applies to a single LIMIT
record or a structure of linked records.

Scheduled increase of limits

A facility exists to schedule increase of Limits on predefined frequencies. The fields
INCREASING.TYPE, INCREASE.FREQ, etc. on the LIMIT application are used to schedule
increase of Limits. The field INCREASING.TYPE can be used to indicate whether the LIMIT increase
applies to a single LIMIT record or a structure of linked records. The increase as per the defined
frequency will be affected, till INCR.END.DATE is reached, on the fields INTERNAL.AMOUNT and
MAXIMUM.TOTAL. The other related fields linked to collateral, such as ONLINE.LIMIT etc. would
get updated depending on whether the LIMIT is Fixed or Variable and the availability of Collateral.

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LIMIT.PARAMETER - General parameters for the Limits system

Within this file are defined parameters that determine the way in which the LIMIT system operates.
Many of these are discussed elsewhere in this user guide. In summary the LIMIT.PARAMETER
controls the following:

1. An indicator to specify whether Foreign Exchange contracts are, or are not, to be netted
before LIMIT comparison.
2. A 'number of days' to define how many days prior to LIMIT Expiry Date and Review Date the
approach of these events is to be reported.
3. A date and cycle to indicate when the first revaluation will occur and at what frequency
thereafter.
4. A date and cycle to indicate when a full Central Liability report (including those Liability
numbers which did not move) needs to be produced in the back-end process.
5. A date and cycle to indicate when the Commodity, Country and Currency reports must be
produced.
6. A number of days; administrative extension days, define the maximum number of days by
which the expiry date of a LIMIT can be "administratively" extended before a new expiry date
must be assigned to the LIMIT.

Figure 46 Limit Parameter Record

7. The LIMIT product definition according to the specific requirements of the Bank. The most
important feature of this file is that it allows the user, for each financial application, to define

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the precise rules applicable to an environment. In this way, the LIMIT verification process
can be established by the user according to a user’s own set of rules without any program
maintenance.

Figure 47 Limit Parameter Record

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8. The product group definition that will allow the user to specify the different products, which in
his opinion must be part of the Commodity, Country and Currency exposure.

Figure 48 Limit Parameter Record

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9. Some other general definitions.

Figure 49 Limit Parameter Record

LIMIT.CHANGE

The LIMIT system is complex and there are a large number of connections and relationships within
the data and other T24 applications. Consequently amendments to some LIMIT information may
cause extensive adjustments and recalculations. These recalculations might be made incorrectly if the
on-line T24 system were to accept transactions against these LIMIT records at the same time.

Consequently some modifications to the data must be made during the T24 overnight batch run. The
modifications to be made are specified on the LIMIT.CHANGE application.

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Figure 50 Limit Change Record

Four different types of information may be modified:

• The liability number on CUSTOMER records.

• The currency and check limit specification on LIMIT records.
• The percentages on LIMIT.REFERENCE records.
• FX limit netting can be enabled or disabled.

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The following screenshot shows each type being modified in the appropriate multi-value groups of
fields:

Figure 51 Limit Change Record

Effective G14.0.00 release, authorised LIMIT.CHANGE recording so that the changes can be
incorporated Online with the following information:

• The liability number on CUSTOMER records

• The currency and check limit specification on LIMIT records
• The percentages on LIMIT.REFERENCE records
• The limit currency in LIMIT record

The records input after the changes will take the new values in LIMIT.REFERENCE record. When
new currency is given in this record with, for example, CREDIT.LINE.NO and the record is verified,
the values in the following fields will be converted to the new LIMIT.CURRENCY.

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• INTERNAL.AMOUNT
• ADVISED.AMOUNT
• MAXIMUM.TOTAL
• OTHER.SECURED
• TOTAL.OS
• AVAIL.AMT

LIMIT.CHANGE.HIST

The LIMIT.CHANGE record gets cleared during the Close of Business process. For reference
information, the record LIMIT.CHANGE.HIST is maintained. When the LIMIT.CHANGE record is
cleared, a new LIMIT.CHANGE.HIST record is created with the data from LIMIT.CHANGE. This
record is keyed by the T24 date.

Sub-allocations - the LIMIT.SUB.ALLOC application

Sub-allocations are the transfer of an amount to or from a LIMIT. A transfer from a LIMIT is known
as a ‘sub-allocation given’ and reduces the available value of the LIMIT. A transfer to a LIMIT is a
‘sub-allocation received’ and increases the available value of a LIMIT. They are input using the
LIMIT.SUB.ALLOC application.

Figure 52 Limit Sub Allocation Record

Sub-allocations can be made to/from the same organisation or from/to an outside one. This is done by
using the CUSTOMER id of the organisation on its own; since the out-standings of the external
organisation cannot be checked the sub-allocations given or taken are assumed to expire on the dates
set.

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Figure 53 Allocation from a branch

Auto expiry

The default settings of LIMIT.SUB.ALLOC are for the sub-allocation to expire on the date set by the
user, this will normally happen whether the sub-allocation is still required or not. Field
AUTO.RESTORE.ALLOC defaulted to Y implies the sub-allocation must be returned on the expiry date.

Figure 54 Auto expiring Sub-Allocation

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Conditional Expiry

The user can elect to set field AUTO.RESTORE.ALLOC to ‘N’ which implies that the sub-allocation will
be allowed until the expiry or until the out-standings are reduced on the receiving Limit so that
returning the sub-allocation does not create an excess on the receiving Limit. If not returned in full or
part the expiry date is extended a further day until it is possible to return the sub-allocation. This
avoids the need to manually renew sub-allocations where the underlying exposure has not been fully
resolved.

Figure 55 Sub-Allocation which does not auto expire

Limit Range

This table is used to define ranges or lists of CURRENCY or COMPANY codes. The data specified
can be used to restrict the use of particular LIMIT records. Records can be defined for either
COMPANY or CURRENCY, and may be specified as a list of values, or a series of ranges. These
records can be utilised on the LIMIT record in the fields ALLOWED.CCY, RESTRICTED.CCY,
ALLOWED.COMP, and RESTRICTED.COMP. It will allow setting up of ‘standard’, ‘often used’ or ‘virtual
views’, as a help or short cut in the limit definition process. (E.g. certain limits may be valid only for
EEC currencies, so a record grouping the currencies in question can be defined).

Country limits - Monitoring credit exposure to countries

Country limits are limits on the total outstanding business that can be conducted with a country. It is a
secondary LIMIT based upon the same update mechanisms as client limits.

Country limits are set against groups of products. For example we can define a group of products
called ‘OVERDRAFTS’ and state that the maximum exposure to overdrafts in France is to be 1M FRF.
The product groups for country limits are specified on LIMIT.PARAMETER:

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Figure 56 Limit Parameter Record

Each LIMIT record is assigned to a country in the COUNTRY.OF.RISK field. If no country is entered
then the system will take a default from the liability customer of the LIMIT.

A LIMIT can then be set against that country using the LIMIT.COUNTRY application. These may
be reported on during the overnight batch.

Figure 57 Country Limits Record

Defining groups of countries for limits monitoring

Countries may be grouped together and limits input and monitored at the group level if required. For
example there may be a requirement to monitor limits against all countries in the European
Community. Country groups are defined in the LIMIT.COUNTRY.GRP application.

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Figure 58 Limit Country Group Record

Splitting a limit across different countries

A single LIMIT may be resident in more than one country, for example if the LIMIT is for a
multinational group of companies. The LIMIT application provides the facility to distribute the LIMIT
amongst more than one country by percentage.

In the following screenshot the LIMIT is distributed between the UK, the United States, and France.

Figure 59 Limit Record, spread across more than one country

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Currency limits - Monitoring credit exposure to currencies

Limits may be monitored against individual currencies overnight. The products to be monitored are
defined on LIMIT.PARAMETER in the same way as country limits.

Figure 60 Currency Limits, monitored against individual currencies overnight

Commodity limits - Monitoring exposure to industries

Limits can be monitored against commodities. Thus total exposure to oil industry can be monitored.
Commodities are defined on the LIMIT.COMMODITY application and use groups of products

Figure 61 Commodity Limit Record

Commodities may be grouped in the same way as countries using the LIMIT.COMMODITY.GRP
application. For example if you have defined oil extraction and oil refining as separate industries you
can now create a commodity group called oil industry and set a single limit to exposure against both.

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Charging for unutilised limits

Functionality to enable the charging of accounts for unutilised limit amounts is detailed in the Accounts,
Interest and Charges user guide.

Reporting

Country exposure report

This report shows exposure to countries as defined in the LIMIT.COUNTRY application. The
product groupings shown are defined in the LIMIT.PARAMETER application.

Figure 62 Report Limit Country Exposures

Commodity Exposure Report - exposure to industries

This report shows exposure to industries as defined in the LIMIT.COMMODITY application. The
product groupings shown are defined in the LIMIT.PARAMETER application.

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Figure 63 - Report Limit Commodity Exposure Limit Currency

This report shows exposure to currencies as defined in the LIMIT.CURRENCY application. The
product groups shown are defined in the LIMIT.PARAMETER application.

Figure 64 Report Limit Currency Exposures

General Errors and Exceptions report

This report shows all exceptions and errors occurring in the LIMIT application. For example it shows
records that have been created by default because no LIMIT was available when a transaction was
entered. It is produced for each account officer.

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Figure 65 Report Limit General Errors

Limits due for review Report

This report shows all limit records due for review.

Figure 66 - Report Credit Lines to Review

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Credit Limits Expiring Report

This report shows details of all credit lines expiring within a ‘user specified’ number of days. This
specification is entered in the LIMIT.PARAMETER application.

Figure 67 - Report Credit Lines Expiring

Expired Limits report

This report shows all limits expired but not reduced to zero:

Figure 68 Report Credit Lines Expired

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Moved Liabilities report - reporting changed liability numbers and groups

This report would show the liabilities that have been amended by the LIMIT.CHANGE application.

Figure 69 - Report Liability Amendment

Report

The Override Message Details report shows the override generated for the LAST.DRAW.DATE.

Figure 70 Report LAST.DRAW.DATE

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Central Liability Ledger

This report is produced for each account officer and shows all the outstanding limits and liabilities:

Figure 71 Report: Central Liability Ledger

Enquiries

LIAB - Limits for a customer or customer liability group

This ENQUIRY shows all the limits and utilisations for a customer or customer liability group:

Figure 72 - Enquiry LIAB

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A drill-down facility is available on this ENQUIRY. If sub-products exist below the LIMIT product
then they will be shown. Once the bottom of the LIMIT structure is reached then the transactions that
have utilised the LIMIT are shown. In the above example the Global line is composed of sub-
products. Drilling down from these will show the actual transactions. This is shown in the levels of
drilldown below:

Figure 73 Enquiry: LIM.TRADE

Drilling down again on the sub-product shows the following:

Figure 74 Enquiry LIM.TXN

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CO.001 - Limits and collateral enquiry

This ENQUIRY shows limits with their associated COLLATERAL and its value:

Figure 75 ENQUIRY CO.001

Drilldown shows the items of COLLATERAL. Below a drilldown on the loans line:

Figure 76 ENQUIRY CO.010

Overview of Input and Processing

Selection of Limit Product
It is possible to specify more than one Limit product as valid for an application in
LIMIT.PARAMETER. At customer level, it is possible to have both Global and Product Limits. It is
possible to restrict both global and product limits to Currency, Company Customer and Products. It is
also possible to define more than one Limit with distinct sequence numbers for a Limit Product. When
a transaction is committed, T24 would default a Limit Product for the transaction, based on standard
processing rules, and the user does not have an option to choose from a list of valid Limit Products.

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It is possible to list all the valid limits at the time of committing a transaction so that the user can select
the LIMIT that is to be used for the transaction.

To facilitate this functionality, in LIMIT.PARAMETER, the following fields could be used:

Figure 77 - LIMIT.PARAMETER

In the field REPORT.MULTIPLE, a pick list is attached with values YES, NO and NULL, (The default
value being Null). Null and No have the same functionality that the system will default the Limit
following standard processing rules. If this field is set to YES, then at the time of committing a
transaction, all existing valid limits will be listed in the transaction’s LIMIT.REFERENCE field, and the
user can make the selection.

This process of selection of valid limits for a transaction could be restricted using the following fields in
LIMIT.PARAMETER:

FILTER
FILTER.OPERANDS
FILTER.FROM
FILTER.TO
The field FILTER can have the following hard coded values:

1. CHECK.EXPIRED
If this is given, then from the available limits to the customer, the expired limits will be filtered
out.
2. CHECK.AVAILABLE.FUNDS
If this is given, then from the available limits to the customer, the limits where all available
funds have been utilised will be filtered out.
3. CHECK.AVAILABLE.MARKER

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If this is given, then from the available limits to the customer, the limits where the
AVAILABLE.MARKER is set to NO will be filtered out.
4. CHECK.DRAW.DATE
If this is given, then from the available limits to the customer, the limits that have crossed
LAST.DRAW.DATE will be filtered out
5. CHECK.CUST.RESTRICT
If this is given, then the available limits to the customer will be checked for ALLOWED.CUST
and RESTRICTED.CUST fields and filter out the limits accordingly
6. CHECK.CURRENCY.RESTRICT
If this is given, then the available limits to the customer will be checked for ALLOWED.CCY and
RESTRICTED.CCY fields and filter out the limits accordingly.
7. CHECK.COMPANY.RESTRICT
If this is given, then the available limits to the customer will be checked for ALLOWED.COMP
and RESTRICTED.COMP fields and filter out the limits accordingly

The filter field can also use of any other fields from the LIMIT application including local reference
fields and I-descriptors.

For the valueCHECK.AVAILABLE.FUNDS (a hard coded filter) the field FILTER in

LIMIT.PARAMETER should be specified as “CHECK.AVAILABLE.FUNDS
“<TXN.AMOUNT.FIELD.NAME>”, where <TXN.AMOUNT.FIELD.NAME> will represent the I-
descriptor/field that would be created in all applications, to represent the amount of the transaction
against which this check needs to be performed. If this field does not exist in the application for which
the transaction is being input then CHECK.AVAILABLE.FUNDS check will be skipped.
Similarly the CHECK.DRAW.DATE filter would search for a field with a name of VALUE.DATE in the
application for which the transaction is being input. If a field VALUE.DATE exists in the transaction the
date would be checked against the LAST.DRAW.DATE in the LIMIT. If this doesn’t exist then the
Processing Date would be used to check against LAST.DRAW.DATE.

• The field FILTER.OPERANDS can only have a value of EQ for the hard coded FILTER values.
For other FILTER values, any valid operand is allowed.
• The field FILTER.CONDITION.FROM can only be equal to YES for the hard coded FILTER
values. For other FILTER values, standard values compatible with the field name specified in the
file FILTER could be used.
• The field FILTER.CONDITION.TO can be input only if FILTER.OPERANDS is RG (Range).
Otherwise this field should be null

The processing of multiple limits selection is explained with an example:

A Customer has got 3 LIMIT (s) 1016.2010.01, 1016.2010.02, and 1016.2010.03. In the
LIMIT.PARAMETER the field REPORT.MULTIPLE is set to YES.

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Having input all transaction data the system will validate the record. As part of this validation the
system will examine the LIMIT records associated to the customer. If the user has already populated
the LIMIT.REFERENCE field with a valid LIMIT ID the record will be processed.
However, if the user has left the field blank the system will return a list of ALL valid limit records for the
user to choose from. This is shown by the following screenshot:

Figure 78 LD Record with Pick List for Multiple Limits

From the pick list the user can choose any one of the Limit that has to be used for the transaction.

In this case, the user can narrow down the selection list by specifying restriction criteria. Suppose the
user input AVAILABLE.MARKER field in 1016.2010.01 as N.

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Figure 79 Limit record Available Marker as “NO”

The user wishes to select only valid Limits, which do not have any Currency restriction and thus
specify as FILTER in LIMIT.PARAMETER the hard-coded value of CHECK.AVAILABLE.MARKER.

Figure 80 LIMIT.PARAMETER Record with filter

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In this case, if an LD is input for the customer then only two limits will be shown in the
LIMIT.REFERENCE as shown in figure 70 below. The Limit 2010.01 would not be displayed, since
the AVAILABLE.MARKER is shown as “No", and in LIMIT.PARAMETER, the
CHECK.AVAILABLE.MARKER is specified as a FILTER for the Limit Selection.

Figure 81 - LD record with 2 LIMIT.REFERENCE

In the same way various restrictions for Currency, Company, and Customer could be specified in the
Limits and filters to restrict selection, the same could be specified in LIMIT.PARAMETER. The
Limits, which satisfy the various filter conditions, will be filtered out and only other eligible records will
be shown in the pick-list. The user can choose the LIMIT to use for the transaction. In case there is
only one LIMIT record that could be selected by the system due to restrictions and filters, the system
will default that LIMIT and it will not be shown in the pick list.

Cross Limits
The reference to Limits and Limit References in this Section concern only the Cross Limit structure,
unless otherwise specifically stated.

A Cross Limit Structure would have three types of Limit References, the PRODUCT Limit References,
the CROSS Limit References and the SUB-PRODUCT Limit References. The Limit References, which
could be used in a Cross Limit structure, would be distinct from those, which could be used in a
Normal Limit structure.

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The three types of Limit References or Limits would be specified in upper case in this document to
distinguish their usage in a Cross Limit structure.

Cross Limits provide a flexible Limit structure with consolidation of Limits at multiple levels, with the
hierarchy of Limits linked through the field RECORD.PARENT. It would be possible to create more than
one LIMIT for a Sub-Product (with different sequence numbers) and attach them to the same
PRODUCT or CROSS Limit, which is not possible in case of normal Limits.

It is possible to define more than one LIMIT for a SUB-PRODUCT (under a PRODUCT or CROSS
Limit) to limit the exposure based on different conditions. For example, under the LIMIT
500101.1800.01 it would be possible to define more than one LIMIT for the SUB-PRODUCT 1860;
LIMIT 500101.1860.01 for Customers 500101 and 500102 (both having Liability Customer 500101),
and LIMIT 500101.1860.02 for Customers 500103 and 500104 (both having Liability Customer
500101).

This facility could also be used to define separate Limits for a SUB-PRODUCT based on Currency or
Company restrictions. For example, to limit the exposure in two different Companies the following
LIMIT(s) could be input; 500101.1870.01 with restriction for use in first Company and
500101.1870.02 with restriction for use in second Company, both with a Record Parent of
500101.1800.01.

When inputting Limits from top-down, users need to input only the PRODUCT or CROSS Limits and
T24 would automatically create or modify the SUB-PRODUCT Limits depending on the Allowed
Products and Customers, subject to some restrictions. It could be also possible to input SUB-
PRODUCT limits without inputting the parent PRODUCT limits, and T24 would automatically create
the PRODUCT limits, which could be transparent to the User.

Product Limit References

Since the processing and validations related to Limits in a Cross Limit structure are different from
those of the normal Limits, it would be necessary to distinguish at LIMIT.REFERENCE level,
whether a Limit Reference could be used in a Cross Limit structure. Limit References for use in a
Cross Limit structure should be specifically defined as explained below.
The PRODUCT Limit References for Cross Limits would be similar to that of normal Limits i.e. ending
with 00’s or 000’s and with a maximum of 4 digits.
In particular, a Global Limit Reference (such as 10000) could not be used in a Cross Limit Structure,
or in a Limit Reference in a Cross Limit Structure.

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LIMIT.CROSS.PARAM
A record should be first input for each PRODUCT Limit Reference in a Cross Limit structure in the
application LIMIT.CROSS.PARAM.

In the following example, using 1800 as a PRODUCT Limit Reference in a Cross Limit structure, a
record with ID 1800 needs to be input in the application LIMIT.CROSS.PARAM. It is essential that
no LIMIT.REFERENCE record with ID in the range 1800-1899 had been input, before the record
with ID 1800 is input in LIMIT.CROSS.PARAM.

In this application, the field TOP.CROSS.REF specifies the maximum value of a CROSS Limit
Reference that could be used under the PRODUCT Limit Reference specified in the ID.

Figure 82 LIMIT.CROSS.PARAM record

Cross Limit References

Any Limit Reference with a value greater than the PRODUCT Limit Reference and less or equal to the
value of TOP.CROSS.REF could be used as a CROSS Limit Reference. In the above example,
LIMIT.REFERENCE IDs greater than 1800 and less or equal to 1840 could be used as CROSS
Limit References. However, when CROSS Limits are input, T24 would validate that they are input only
in ascending order. The above example would validate that the first CROSS Limit under a PRODUCT
Limit of 1001.1800.01 would be 1001.1801.01, then 1001.1802.01, etc.

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Sub-product Limit References

Any LIMIT.REFERENCE ID with a value greater than the TOP.CROSS.REF and whose ID agrees
with the PRODUCT Limit Reference (first digit in case of 3 digit Limit References and first and second
digits in case of 4 digit Limit References) could be used as a SUB-PRODUCT Limit Reference. In the
above example, LIMIT.REFERENCE IDs greater than 1840 and less than 1900 could be used as
Limit References for SUB-PRODUCT Limits under the PRODUCT Limit Reference of 1800.

Setting up the Limit References and Limit Parameter

The first step in setting a Cross Limit structure would be creating the LIMIT.CROSS.PARAM record
for the PRODUCT Limit Reference. The next step would be input of the required SUB-PRODUCT
LIMIT.REFERENCE records. When a SUB-PRODUCT LIMIT.REFERENCE record is input, the
field CROSS.LIMIT would be automatically updated to a value of “PROD”. Since a hierarchy of Limits
in a Cross Limits structure could be linked through their Record Parents, input will not be allowed in
the field SUB.PRODUCT.LEVEL.

Figure 83 - SUB-PRODUCT LIMIT.REFERENCE Record

Then the PRODUCT Limit Reference record could be input and the SUB-PRODUCT Limit References
could be attached to it through the field REFERENCE.CHILD. In the case of a PRODUCT Limit
Reference, the field CROSS.LIMIT would be automatically updated to a value of “TOP”.

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Figure 84 PRODUCT LIMIT.REFERENCE Record

Then the required CROSS Limit Reference records could be input. Since a CROSS Limit Reference is
a consolidating Limit Reference similar to a PRODUCT Limit Reference, input would not be allowed in
the fields LIMIT.PERCENTAGE, LIMIT.BAND.LEVEL, MATURITY.PERIOD, MAT.PERIOD.PERC,
LIMIT.SUBROUTINE, PERCENTAGE.CAP, PERCENTAGE.FLR and PERC.CALC.BASIS. In the case
of a CROSS Limit Reference, the field CROSS.LIMIT would be automatically updated to a value of
“CROSS”.

Figure 85 CROSS LIMIT.REFERENCE Record

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Finally, in LIMIT.PARAMETER the SUB-PRODUCT Limit References could be set up as Limit

Products in the field PRODUCT.NO.

Input of Limits in a Cross Limit Structure

The LIMIT(s) in a Cross Limit Structure could be input from Top-Down. In this case, the order of input
would be the PRODUCT Limit, followed by the CROSS Limits. T24 would automatically create or
modify the SUB-PRODUCT LIMIT records depending on the Allowed Products (Field:
PRODUCT.ALLOWED) and Allowed Customers (Field: ALLOWED.CUST). These T24 defaulted records
would be created with unauthorized (INAU) status. The T24 defaulted records would be automatically
deleted or authorized when the LIMIT record input by the User is respectively deleted or authorized.

In addition, users could also input additional SUB-PRODUCT limits, if required and link them to a
CROSS Limit or a PRODUCT Limit using the RECORD.PARENT field, subject to validations.

When a PRODUCT or CROSS Limit record is input by the User, the field LIMITS.MODIFIED would
hold the key of the SUB-PRODUCT LIMIT records updated by T24, while in the T24 created or
modified SUB-PRODUCT LIMIT records, the field CREATED.FROM would hold the key of the User
input LIMIT record.

When an unauthorized T24 updated SUB-PRODUCT Limit is manually modified by a User, the link for
auto-update would be deleted from both the SUB-PRODUCT and the User input Limit records i.e. the
reference to the auto-updated limit record would be deleted from the field LIMITS.MODIFIED of the
PRODUCT or CROSS Limit input by the User; and in the manually modified SUB-PRODUCT Limit
record, the field CREATED.FROM would be made null. In this case, when the user input LIMIT record
is deleted or authorized, the SUB-PRODUCT Limit records (which had been manually updated and
hence not linked) would not be automatically deleted or authorized; and these records would need to
be manually deleted or authorized.

There would be restrictions in inputting Limits after they have been updated by transactions. In
particular, the automated creation or modification of SUB-PRODUCT Limits would not be processed
when PRODUCT or CROSS Limits are modified. Further, new CROSS Limits could not be input. The
field RECORD.PARENT of existing CROSS Limits or SUB-PRODUCT Limits could not be modified.
However, new SUB-PRODUCT Limits could be input.

The following examples would explain the input of LIMIT records and the LIMIT records created or
modified by T24.

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Example 1
Multiple CROSS Limits and SUB-PRODUCT Limits:

A facility (PRODUCT Limit Reference 1800) is shared by two SUB-PRODUCTs (1860 and 1865) and
by four customers (500101, 500102, 500103, and 500104).

PRODUCT Limit (500101.1800.01) is defined with Allowed Products 1860, 1865 and Allowed
Customers 500101, 500102, 500103, and 500104.

CROSS Limit (500101.1801.01) is defined with Allowed Products 1860, 1865 and Allowed Customers
500101 and 500102 and linked to the PRODUCT Limit 500101.1800.01.

CROSS Limit (500101.1802.01) is defined with Allowed Products 1860, 1865 and Allowed Customers
500103 and 500104 and linked to the PRODUCT Limit 500101.1800.01.

Two additional Limits are defined for the SUB-PRODUCT Limit 1860, one (500101.1860.03) with
Allowed Customers 500101, 500102 linked to the first CROSS Limit 500101.1801.01, and another
(500101.1860.04) with Allowed Customers 500103, 500104 and linked to the second CROSS Limit
500101.1802.01.

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Limits input by User and created/modified by T24

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Step 1

Input PRODUCT Limit: 500101.1800.01 with Allowed Products 1860, 1865 and Allowed Customers
500101, 500102, 500103, and 500104.

Figure 86 Product Limit Input by User

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T24 creates the SUB-PRODUCT Limit 500101.1860.01 using the same Allowed Customers as in the
PRODUCT Limit, and with a RECORD.PARENT of 500101.1800.01.

Figure 87 SUB-PRODUCT Limit created by T24

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T24 creates SUB-PRODUCT Limit 500101.1865.01 using the same Allowed Customers as in the
PRODUCT Limit, and with a RECORD.PARENT of 500101.1800.01.

Figure 88 SUB-PRODUCT Limit created by T24

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Step 2

Input first CROSS Limit: 500101.1801.01 with RECORD.PARENT of 500101.1800.01, Allowed

Products 1860, 1865 and Allowed Customers 500101, 500102.

Figure 89 First Cross Limit Input by User

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Existing SUB-PRODUCT Limit Record 500101.1860.01, modified by T24 using the same Allowed
Customers as 500101, 500102 (same as in Cross Limit) and Record Parent; which is the same as the
Cross Limit 500101.1801.01.

Figure 90 SUB-PRODUCT Limit modified by T24

Similarly for the SUB-PRODUCT 1865, T24 would modify the existing Limit Record 500101.1865.01.

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Step 3

Input second CROSS Limit: 500101.1802.01 with RECORD.PARENT of 500101.1800.01, with Allowed
Products 1860, 1865 and Allowed Customers 500103, 500104.

Figure 91 Second Cross Limit Input by the User

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New SUB-PRODUCT Limit Record 500101.1860.02 now modified by T24 with RECORD.PARENT as
500101.1802.01.

Figure 92 SUB-PRODUCT Limit modified by T24

Similarly, another SUB-PRODUCT Limit Record 500101.1865.02 would be created by T24 with
Record Parent as 500101.1802.01.

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Step 4

Additional Limit input by User for the SUB-PRODUCT 1860 with Allowed Customers 500101, 500102
and RECORD.PARENT as the Cross Limit 500101.1801.01

Figure 93 Additional SUB-PRODUCT Limit input by User

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Step 5

Additional Limit input by the User for the SUB-PRODUCT 1860 with Allowed Customers 500103,
500104 and RECORD.PARENT as the Cross Limit 500101.1802.01

Figure 94 Additional SUB-PRODUCT Limit input by User

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Example 2
Multiple levels of CROSS Limits:

A facility (PRODUCT Limit Reference 1800) is shared by four SUB-PRODUCT’S 1860, 1865, 1870,
and 1875.

CROSS Limit (500101.1801.01) defined with Allowed Products 1860, 1865 and 1870 and linked to the
PRODUCT Limit 500101.1800.01.

CROSS Limit (500101.1802.01) defined with Allowed Products 1860, 1865 and linked to the CROSS
Limit 500101.1801.01.

Limits input by User and created/modified by T24

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Limits

Step 1

Input PRODUCT Limit: 500101.1800.01 with Allowed Products 1860, 1865, 1870, and 1875.

Figure 95 PRODUCT Limit Input by User

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Limits

T24 creates SUB-PRODUCT Limit 500101.1860.01 with a RECORD.PARENT of 500101.1800.01.

Figure 96 SUB-PRODUCT Limit created by T24

Similar SUB-PRODUCT Limit Records 500101.1865.01, 500101.1870.01 and 500101.1875.01 would

be created by T24.

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Step 2

Input first CROSS Limit: 500101.1801.01 with a Record Parent of 500101.1800.01, and with Allowed
Products 1860, 1865, and 1870.

Figure 97 CROSS Limit Input by User

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Existing SUB-PRODUCT Limit Record 500101.1860.01, modified by T24 with Record Parent as
500101.1801.01.

Figure 98 SUB-PRODUCT Limit modified by T24

Similarly, Record Parent would be updated in the existing SUB-PRODUCT Limits 500101.1865.01 and
500101.1870.01.

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Step 3

Input second CROSS Limit 500101.1802.01 with Allowed Products: 1860, 1865 and with a Record
Parent of 500101.1801.01.

Figure 99 Second CROSS Limit Input by User

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Existing SUB-PRODUCT Limit Record 500101.1860.01, modified by T24 now with Record Parent as
500101.1802.01.

Figure 100 SUB-PRODUCT Limit modified by T24

Similarly, the existing SUB-PRODUCT Limit Record 500101.1865.01 would be modified by T24 with
Record Parent as 500101.1802.01.

Independent Sub-product Limits

It is possible to input independent SUB-PRODUCT Limits, without inputting the PRODUCT Limit
record. When the first such SUB-PRODUCT Limit record is input, T24 would automatically create the
related PRODUCT Limit record. The T24 created PRODUCT Limit record would be with an
unauthorized (INAU) status. When the User input SUB-PRODUCT Limit record is deleted or
authorized, the T24 created PRODUCT Limit record would be automatically deleted or authorized. The
T24 created PRODUCT Limit record would be without any Amounts or Allowed Products, since it
would be transparent to the User.

In this case, the field LIMITS.MODIIFED in the SUB-PRODUCT Limit input by the User would hold
the key of the T24 created PRODUCT Limit record. The field CREATED.FROM in the T24 created
PRODUCT Limit record would hold the key of the SUB-PRODUCT Limit input.

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The PRODUCT Limit would be transparent to the User and normally manual updates to the
PRODUCT Limit would not be called for. However, if any manual update is done to the PRODUCT
Limit, it would be processed in a similar to a PRODUCT Limit input in a top-down fashion, as
explained earlier.

Example 1
User input SUB-PRODUCT Limit 500101.1860.01 without inputting the PRODUCT Limit
500101.1800.01.

Figure 101 - Independent SUB-PRODUCT Limit Input by User

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T24 created PRODUCT Limit Record 500101.1800.01:

Figure 102 PRODUCT Limit Record created by T24

Example 2
After authorizing the above referred SUB-PRODUCT Limit 500101.1860.01, the user could input
another SUB-PRODUCT Limit for the same Limit Reference i.e. 500101.1860.02 with the same
Record parent of 500101.1800.01.

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Figure 103 Independent SUB-PRODUCT Limit input by User

LIMIT.CROSS.USAGE
This table is with an ID of 'Liability Customer ID.PRODUCT Limit Reference ID'.

This live table is updated for each PRODUCT Limit input for a Liability Customer and used by T24 for
creating/modifying new Limit records. For each PRODUCT Limit, this table records the Product
Sequence No., the CROSS Limits and SUB-PRODUCT Limits used, the Next CROSS Limit that would
be allowed. It also holds the next allowed PRODUCT Limit Sequence No.

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Figure 104 - LIMIT.CROSS.USAGE

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