Calculation of Safe Custody Fees

Safe Custody Fees are calculated during the COB as part of the batch job SC.SAFE.ADV.CHG. The frequency of
calculation is defined at Company or Portfolio level from set-up of the SAFECUSTODY.VALUES application,
which is keyed on the company ID.

SAFECUSTODY.VALUES - Safe Custody Fees

As explained in the Management fees of the above section, the SAFECUSTODY.VALUES record is used for both
Management fees and Safe Custody fees. It is used to specify the top level information concerning the
CATEGORY, to post the fees and use the transaction codes. The CHARGE.FREQ field associated with the
CHARGE.TYPE of SC modules controls the Safe Custody fees run.
Different date ranges must be specified in the SAFECUSTODY.VALUES record, to allow the calculation of fees to
be performed correctly for opening and closing accounts.
These four ranges are specified in the CALC.TYPE field:
 PERIODIC.OPEN Used when the Charges run is an
automatic charging run controlled by
the frequency in the CHARGE.FREQ field
and the portfolio was opened since the
last automatic run.

PERIOD.NORMAL Used when the charges run is an

automatic charging controlled by the
frequency in the CHARGE.FREQ field and
the portfolio was open at the time of
the last fee run.

CLOSURE.NORMAL Used when the fees are being calculated

because a portfolio is being closed and
the portfolio was open at the time of
the last fees run.

CLOSURE.OPEN Used when the fees are being calculated

because a portfolio is being closed and
the portfolio has been opened since the
last fee run.

The associated fields are PERIOD.START, PERIOD.END, NO.OF.MONTHS, DELIV.START and DELIV.END have a
particular type of input. This is done using the characters :
“-“,”+”,”L”,”C” and “O”
where;
• “O” represents the date of the portfolio opening.
• “L” represents the date of the Last Fees Run.
• “C” represents today's system date.
• These are entered together with numeric input to build a date.

Thus
• “C-1” is the calendar date before today.
• “O+1” is the calendar date after the opening date of the portfolio.

The Safe Custody fees system works on a monthly basis, so if the user wants to have the Safe Custody fees
calculated from the last run date up and including the current date, input should be made as follows:

PERIOD.START L+1

This is because of the monthly calculation. For example, if the current working date is 31/03/99 and the last
run was done on 31/12/98, then the values of the variables are L = 199812 and C = 199903. As the system
considers the last run date to be the first of the month, this translates a PERIOD.START of 'L' and a PERIOD.END
of 'C', as the period 01/12/98 to 31/03/99 which is four months. Whereas, the PERIOD.START of 'L+1' and a
PERIOD.END of 'C' gives a period of 01/01/99 to 31/03/99; hence a period of three months.
A minimum and maximum value for the Safe Custody fees can be specified using the
MIN.MAX.CCY,MIN.AMOUNT,MAX.AMOUNT and DEF.MIN.MAX.CCY fields. The maximum and minimum
screen shots are calculated based on the Safekeeping Charge lesser that the discount only, it does not cover
any Depository charges.
The typical set-up for Safe Custody fees is shown in below screen shot.

SAFECUSTODY.VALUES - Typical "Quarterly in arrears"

The Safe Custody fees are calculated on a frequency that is set-up at the company level as the COMPANY.CALC
is set to ‘Y’. Thus, for this company the value of the SAFECUSTODY.FREQ field in the SEC.ACC.MASTER records
of Customer Portfolios is same as the CHARGE.FREQ field in the SAFECUSTODY.VALUES record. In this case, the
SC.SAFE.ADV.CHG job runs during the COB and checks the system date against this date and if the date is less
than the next working day, then the system automatically calculates the Safe Custody fees for all the Customer
Portfolios on the system.

SEC.ACC.MASTER - Safe custody fees set-up

Whether the Safe Custody fees are calculated company wide or on a Portfolio basis, the frequency of
calculation is displayed in the Safe Custody fees calculation fields in the SEC.ACC.MASTER record that defines
the Portfolio. The date of the next Safe Custody fees run for a Portfolio is held in the SAFECUSTODY.FREQ field
together with the frequency of calculation. If the COMPANY.CALC field on SAFECUSTODY.VALUES is set to 'NO',
then this field can be amended by the user, otherwise it is for information to the user only. The date of the last
run and the ID of the SCSK.GROUP.CONDITION record that this Portfolio is linked to are also given.
The COUNTRY.CHECK field allows the user to define Security Domicile or Security Country Domicile or Stock
Exchange Domicile based on which the system calculates the Base amount for Safekeeping fees.

SAFECUSTODY.VALUES - Country Check field

During the COB, T24 validates the system date against the date in the SAFECUSTODY.FREQ field for any
Customer Portfolio where the PORTFOLIO.FEES date is AUTOMATIC and if the date is lesser than the next
working day, the system automatically calculates the Safe Custody fees for that Portfolio.

Posting of Safe Custody Fees

The details of the calculated Safe Custody Fees are written to the SAFEKEEP.HOLDING file. They remain here to
enable the Account Officer of a particular Portfolio to have an opportunity to review the calculated Safe
Custody Charges and amend them if necessary before the Safe Custody fees posting is done.

SAFEKEEP.HOLDING - Posting request

Note: Some of the fields can be amended, such as the ACCOUNT.NO, VALUE.DATE, FOREIGN.CHG.LCY, DISC.AMOUNT.LCY and
LOCAL.FEES.LCY

SAFEKEEP.HOLDING
The Portfolios can be locked at this stage in order to block any new back dated transaction which might have
an impact on the SAFEKEEP.HOLDING record.
In case, the Portfolio is locked at the CALCULATED status and a new back dated transaction is input, then the
same might have any impact on the SAFEKEEP.HOLDING record. Provided the locking date is equal to or
greater than Advisory Charge frequency date. If the locking is removed and a new back dated transaction is
input, then the transaction is processed as per the existing functionality.
The Portfolios can be locked at this stage in order to block any new back dated transaction which might have
an impact on the SC.ADVISORY.CHG.POSTED record.
Refer Locking Client Reporting User Guide for more details on Locking of Portfolio.

Safekeeping Account Number

While generating Safekeeping and Management entries, a Suspense account or an account belonging to
another Customer or Portfolio is used in SAFEKEEP.HOLDING and SC.ADVISORY.CHG, in order to charge the
Customers.
Override messages are generated (same overrides as used in SEC.TRADE) when the account number is
modified in SAFEKEEP.HOLDING or SC.ADVISORY.CHG records or in SAFEKEEP.HOLDING.POSTED or
SC.ADVISORY.CHG.POSTED records.
Override messages are generated as given in the below matrix table:

Application/Account Different Customer/Suspense Different Portfolio of same

Owner Account customer

SAFEKEEP.HOLDING Account Not part of this Portfolio Account Not part of this
Owner Portfolio

SAFEKEEP.HOLDING.POSTED Account Not part of this Portfolio Account Not part of this
Owner Portfolio

SC.ADVISORY.CHG Account Not part of this Portfolio Account Not part of this
Owner Portfolio

SC.ADVISORY.CHG.POSTED Account Not part of this Portfolio Account Not part of this
Owner Portfolio

1. When an ACCOUNT field is modified with an Account of another Portfolio, belonging to the same customer and the override message is
generated as shown in the below screen shot.
 SAFEKEEP.HOLDING_ACCOUNT NOT PART OF THIS PORTFOLIO
The account number modified in SAFEKEEP.HOLDING record is automatically updated in
SAFEKEEP.HOLDING.POSTED record. This also applies for SC.ADVISORY.CHG and SC.ADVISORY.CHG.POSTED
records.
2. When an account does not belong to the same Customer, the override message is generated as shown in the below screen shot.
 SAFEKEEP.HOLDING_A/C CUST DIFFERS FROM PORTFOLIO OWNER
When the Account number is modified in SAFEKEEP.HOLDING record, the account is automatically updated in
SAFEKEEP.HOLDING.POSTEDrecord. This also applies for SC.ADVISORY.CHG and SC.ADVISORY.CHG.POSTED
records.
An account can also be directly modified in SC.ADVISORY.CHG.POSTED or SAFEKEEP.HOLDING.POSTED
record.
An example of SAFEKEEP.HOLDING.POSTED record for Account number modified is shown in the below
screen shot.
 SAFEKEEP.HOLDING.POSTED_A/C CUST DIFFERS FROM PORTFOLIO OWNER
Once all the SAFEKEEP.HOLDING records are reviewed the set-up of the SAFECUSTODY.VALUES application for
the respective company is posted for the Safe Custody Fees. If the COMPANY.POST flag on
SAFECUSTODY.VALUES is set to ‘Y’, that is, the posting of Safe Custody Fees is made for all the Customer
Portfolios at the same time, then the postings can be made by setting the POST.CHARGE field, which is
associated with SC in the CHARGE.TYPE field in the SAFECUSTODY.VALUES record to 'Y'. Then the charges are
posted during the next COB. Alternatively, they can be posted online by running the SC.SAFE.FEES.POST
application.
SC.SAFE.FEES.POST Application
If the COMPANY.POST flag is set to ‘Y’, then the only ID allowed is ‘ALL’ and the only fields where input is
allowed are POST.ONLINE and RETURN.OVERRIDE. Using the input and authorisation function on this record, it
will post all the unposted SAFEKEEP.HOLDING records for the Company.

SC.SAFE.FEES.POST – Example record

If the COMPANY.POST flag is set to 'NO', then the Safe Custody fees can be posted for an individual Portfolio or
for all Portfolios for a particular Account Officer (type ALL in the PORTFOLIO.NO field). If the POST.ONLINE field
is set to 'NO', then the posting takes place in the start of day phase of the COB; otherwise it takes place in real
time. Again the input (and authorise) or verify functions must be used to affect the posting.
Alternatively, the Safe Custody fees as in the SAFEKEEP.HOLDING table can be posted through the
SC.SAFE.FEES.POST application, by verifying the record. After the verification, the TSA.SERVICE record and
SC.SAFE.FEES.POST must have been started automatically already. Further, the Service Agent needs to be
invoked by typing START.TSM -DEBUG at the jBase prompt and the user need to start the respective Service
Agents manually. This allows the processing of all the SAFEKEEP.HOLDING records with PROCESS.STAGE as
'CALCULATED' and post the Safekeeping fees.
In case, the Portfolio is locked at the POSTED status and a new back dated transaction is input, then the same
might not have any impact on the SAFEKEEP.HOLDING.POSTED record for the blocked month. Provided the
locking date is equal to or greater than the Advisory Charge frequency date. If the locking is removed and a
new back dated transaction is input, then an REPOST or ADJUST entry is posted based on the set-up at
Portfolio Level.
The FEE.ADJUSTMENT.TYPE field in AM.PARAMETER application holds the values namely REPOST or ADJUST.
The values cannot be modified once set and the default value is ADJUST. ADJUST indicates posting of
differential fees between already posted and the newly computed fees. Whereas, the REPOST indicates the
new fees which are to be posted as a new entry and the old posted entries must be reversed.

AM.PARAMETER record-FEE.ADJUSTMENT.TYPE
The FEE.ADJUSTMENT.TYPE field is available in SEC.ACC.MASTER application and it defaults the value from the
AM.PARAMETER application; the same is amended by the user at any point in time at Portfolio level.
 SAM record-FEE.ADJUSTMENT.TYPE
If a back dated transaction is input with the Portfolio in unlocked status, then the system will REPOST or
ADJUST as per the set up in SEC.ACC.MASTER. The posting can be made to ADJUST at the
SAFEKEEP.HOLDING.POSTED record level, by setting the ADJUST.FEES field as 'YES' and ADJUST.VALUE.DATE
with a valid value date. This overwrites the set-up at Portfolio level.

SAFEKEEP.HOLDING.POSTED record
The ADJUST.FEES field holds the values YES or NULL. If this is set as 'YES', ADJUST.VALUE.DATE must be entered
by the user.
The value date of posting the Adjustment Entries is entered in the ADJUST.VALUE.DATE field.
 SAFEKEEP.HOLDING.POSTED-Adjust
If the STMT.ENTRY - ADJUST.FEES is set to YES, then the below screen is displayed.

SAFEKEEP.HOLDING.POSTED-Adjust-STMT entry
If the CATEG.ENTRY - ADJUST.FEES is set to YES, then the below screen is displayed.
 SAFEKEEP.HOLDING.POSTED-Adjust-CATEG entry

SAFEKEEP.HOLDING.POSTED-Repost
If the STMT.ENTRY - ADJUST.FEES is set to 'NULL', then the below screen is displayed.
 SAFEKEEP.HOLDING.POSTED-Repost-STMT entry
If the CATEG.ENTRY - ADJUST.FEES is set to 'NULL', then the below screen is displayed.

SAFEKEEP.HOLDING.POSTED-Repost-CATEG entry

Safekeeping Fees - Monthly Average Balances and Accruals

As an alternative to the previously described process, instead the user may require to extend the Average
Balance method; so that it is based on the Average Daily Balance for each month during the charge cycle. This
process enables fees to be Accrued monthly to P/L, while the contra entry is posted to an internal Suspense
account. All calculations are performed in the local currency of the System.
This method requires some additional set-up and caters only for instances, where the charge frequency is
global (that is, the same for all customers). It is not designed to run parallel to the earlier described process.
If the Bank is already using this earlier described process, the user must first ensure that the current charge
cycle for all customers are completed. The user must ensure that the COMPANY.CALC field in the
SAFECUSTODY.VALUES application is set to 'Y', so that all customers are charged at the same time in
accordance with the frequency defined in the CHARGE.FREQ field of the same file.

Safekeeping Fees - Setting-up for Daily Average Balance

To set-up this process, the user must first define the requirement using the SAFECUSTODY.VALUES file.
 SAFECUSTODY.VALUES - Setting-up average balances (Step 1)
The user must also set the DAILY.EXTRACT field to 'YES', to indicate that the daily balances must be extracted
and held on the SC.SAFEKEEP.ACTIVITY and SC.ASSET.BAL files (described below).

SAFECUSTODY.VALUES - Setting-up average balances (Step 2)

In addition to the above, the user must set-up the AVERAGE.CLOSING field on all the
SCPM.CHARGE.PARAMETER files to 'MONTH.AVERAGE' as shown in the below screen shot.

SCSF.CHARGE.PARAMETER - Setting to MONTH.AVERAGE basis

The AVERAGE.CLOSING field can be set to 'MONTH.AVERAGE', only if the DAILY.EXTRACT field in the
SAFECUSTODY.VALUES file was set to 'YES'. The above set-up instructs the system to extract the daily balances
into the SC.SAFEKEEP.ACTIVITY file.
Since the data is informational only, this file is called as a 'live' file and therefore the can only interrogate the
data.
 SC.SAFEKEEP.ACTIVITY - Example activity
Positional details are stored monthly. The ID of the above record indicates the following:

888-1 Portfolio number

 4447 Depository

003175-000 Security

200102 Year and Month (February 2001)

Within that particular record, the user can view the Daily Balance details.
This particular position opened the month with a balance of 35,000 and 5th is the first working day of the
month. There are only six working days during the test month.
These Average balances are calculated in the same way for both Nominal and Asset values. The Nominal value
(displayed in the above screen shot) from the SC.SAFEKEEP.ACTIVITY file is as follows:

Date Balance Days Products Avg Bal

5 35000 5 175,000 35,000.00

6 42000 1 42,000 36,166.67

7 55000 5 275,000 44,727.27

12 55000 8 440,000 49,052.63

20 55000 8 440,000 50,814.81

28 50000 1 50,000 50,785.71

Table 5 Calculation of Average Balance

The above table illustrates the user, how the Average balance is computed; the test month is February in a
non-leap year, hence 28 is the total number of days considered.
On every month end, the Averaged Nominal and Asset Value amounts are passed to the
SAFECUSTODY.EXTRACT file for storage until the end of the charge period.
 SAFECUSTODY.EXTRACT - Example
The above 'Live' file is used to store the closing monthly balances for each candidate position extracted from
within the SC.SAFEKEEP.ACTIVITY file.
The System uses these details collectively, to calculate the various charges that are then added in the
SAFEKEEP.HOLDING file (description is found earlier in this topic).

Safekeeping Fees - Setting-up parameters for monthly accruals

Define a category to which the user can post the monthly accruals, as the first step. This can be done by
specifying an appropriate Category Code in the range of 11000 to 19999 as shown in the ACCRUAL.CATEG field
below; where CATEGORY 13333 is opened for this purpose.
 SAFECUSTODY.VALUES - Setting-up accruals
Set the PERFORM.ACCRUAL field to 'MONTHLY', to make the accruals as per the user's wish.

SAFECUSTODY.VALUES - Setting-up accruals 2

The above set-up instructs the System to perform Accruals at each month-end. These Accruals are based on
the Average Daily balance for every month during the charge cycle, which in turn can be monthly, quarterly,
half yearly or annually as required.
Accruals are performed every month end and posted to the Account, opened using the ACCRUAL.CATEG value
set-up. This is displayed in the SAFECUSTODY.VALUES record as shown in the above screen shot and an
example of STMT.ENTRY is also shown above.
 STMT.ENTRY - Accrual safe custody fee
The user can view the accrual being posted to the Suspense account CHF-13333-0001. Accruals are always
made in local currency for which this test Account is CHF (Swiss Francs).
The contra entry to the above Accrual to Suspense is made to the Profit and Loss account as shown in the
below screen shot which illustrates a typical CATEG.ENTRY record.

CATEG.ENTRY - Safe custody fees accrued profit

After posting of the fees, the PROCESS.STAGE field is displayed as 'POSTED'. The Statement Entries also
displays the respective entries as posted to the Customer’s account.

SAFEKEEPING FEE - Customer account update (STMT.ENTRY)

Safekeeping Fees Accrual Accounting Rules

Safekeeping fee Accrual entries are raised at month end as follows:

DR Safekeeping Fee Accrual A/C (SAFEKEEP.ACCR.ACCT on

SEC.ACC.MASTER)

CR P&L (CR.CATEG.CODE on SAFECUSTODY.VALUES

forCHARGE.TYPE ='SC')

If the user makes any adjustments to the calculated charges in the SAFEKEEP.HOLDING record; then the
system passes the adjustment entries to adjust the accruals.
If the charge is then:

DR Safekeeping Fee Accrual A/C with the increase

CR P&L with the increase

If the charge is decreased then:

CR Safekeeping Fee Accrual A/C with the decrease

DR P&L with the decrease

On final posting of charges, the Accounting that follows is as shown below:

CR Safekeeping Fee Accrual A/C

DR Customer’s charge account

Safekeeping and Management Fees – Previous Month closing

balance based
In addition to the calculation based on Average or Closing balance as mentioned above, the user also has the
ability to calculate the fee based on previous month closing balance by setting the AVERAGE CLOSING field to
PREV.MONTH.CLOSE in SCSF.CHARGE.PARAMETER or SCPM CHARGE PARAMETER. If the user want to use this
method, the only condition is that; all the charge parameter records must be set to PREV.MONTH.CLOSE. It is
not possible to have some records with PREV.MONTH.CLOSE set and others with CLOSING or AVERAGE.
The system calculates the Safe Custody fee, Foreign charges (Depository charges) and the Advisory charges on
Portfolio value or Nominal (as the case may be) for the previous month end. The Portfolio base values for the
previous month end is picked up from the SAFECUSTODY EXTRACT or SC ASSET BAL files (as the case maybe).
If the fee charge period is from January 1st to March 31st (Q1), the total fee for Q1 is:
(Value at end December * rate * month days/year days) + (Value at end January * rate * month
days/year days) + (Value at end February * rate * month days/year days).
The month days and year days might vary based on the Day Basis set in SAFECUSTODY.VALUES record.
If there are any rate changes during the period, the system re-calculates the fee for the entire period based on
the current rate. However, if there is a requirement to pro-rate the calculations based on rate changes during
the period, it can be done by setting the DAILY.ACCR.TYPE field in SAFECUSTODY VALUES to DAILY.RATES
For example, if there is a rate change from r1 to r2 on 11th of January, then the Q1 fee is:
(PVbase of Dec * r1 for 10 days)+ (PVbase of Dec * r2 for remaining Jan days)+(PVbase of Jan *r2 for
Month days)+ (PVbase of Feb*r2 for month days).
If the user selects the PREV.MONTH.CLOSE option, then the fees are calculated based upon the Portfolio value
for the end of previous month. For the Portfolios opened in the middle of the charge period, there are no
balances for the previous month end. In such cases, the number of days from the opening date to month end
is carried forward to the next month for the calculation of fees. The below table illustrates the details of the
Portfolios opened at different stages of the charge cycle:
 Portfolio Portfolio opened Portfolio opened in
opened in in February March (third month)
January (first (second month)
month)

Opening Opening on Opening on 20th Opening on 20th

of a 20th January: February: March:
portfolio
Q1 will have 0 Q1 will have 0 There will be no fee
fee for fee for January + in Q1 and 12 days of
January + 0 fee for Q1 will be added to
(PVBase at February + Q2 (April days).
January end * (PVBase at
rate for 40 February end * ‘* - assuming Day
days) + rate for 40 days) basis as Actual and
(PVBase at for a non-leap year
February end ‘* - assuming Day
* rate for 31 basis as Actual
days) and for a non-
leap year
‘* - assuming
Day basis as
Actual and for
a non-leap
year

Fee Review within the charge cycle

With PREV.MONTH.CLOSE option, the system is able to configure and allows to calculate the fee for the whole
calculation period on any day of the last month in the charge cycle. As part of COB processing on the day
before the date specified in DAILY.POST.DATE, the system calculates the charge for the whole period based on
parameters set and updates the same in show-fee records like SAFEKEEP HOLDING and SC ADVISORY CHG.
This enables the Account Officer to review the calculated charges, make amendments to the same and post
them within the charge cycle.
In our example, if the DAILY.POST.DATE is set to 1st, then the fee records are created with the full period
charges as part of COB on the last day of February. These are available for the Account Officer to review on the
1st of March. The entire review and posting process can be completed within the charge cycle. Otherwise, the
fee records are available for review only on the 1st of April, which actually falls in the next charge period.

Fee calculation on Portfolio closure

If a Portfolio is closed in the middle of the charge period, then the fee is calculated only till the closure date.
The fee is applied for number of days from the last calculation period (or Portfolio opening date whichever is
later).
The following table illustrates the handling of closure at different stages of the charge period:
 Portfolio Portfolio Portfolio closed in
closed in closed in March (third month) –
January (first February after show fee date
month) (second
month)

Closure Closing on Closing on Closure on 10th March

of a 20th January: 20th February:
portfolio Fees will be (PVBase at
Q1 will have Q1 will have December end * rate *
(PVBase at (PVBase at Jan days) + (PVBase at
December December end January end * rate * Feb
end * rate for * rate * Jan days) + (PVBase at
20 days). The days) + February end * rate for
calculations (PVBase at 10 days).
will stop on January end *
that date rate for 20 Since on show fee date,
days) the whole period fee
would have been
calculated and updated
in SAFEKEEP.HOLDING
and SC.ADVISORY.CHG,
these need to be
reworked. As part of
closure processing, these
records would be
amended to include the
fee only till closure date.

For all the above processing, days carry over for newly opened Portfolios, Closed Portfolios fee processing as
above, pro-rating of fees for rate changes and fee review within the charge cycle, is allowed only for
PREV.MONTH.CLOSE option for now.
A SAFECUSTODY.VALUES record with all these parameters set is shown in the below screen shot.

SAFECUSTODY.VALUES
As mentioned in the 'CALCULATION OF SAFE CUSTODY FEES' section (above), the fees System works on a
month basis for other methods of fee calculation. However, for PREV.MONTH.CLOSE, the System works on
number of days basis methods. The number of days in the period is calculated based on the day basis set. The
ranges specified in the CALC.TYPE field (PERIODIC.OPEN, PERIODIC.NORMAL and so on..) and the associated
fields (PERIOD.START, NO.OF.MONTHS and so on..), does not has a bearing on the fee calculation under this
method.
Safekeeping and Management Fees – Daily Accrual
Daily Accrual of Safekeeping and Management fees are done, if the fees are set which is to be calculated on
the previous month closing balances. The first step is to 'switch on' the Daily Accrual in SAFECUSTODY.VALUES
record.

SAFE.CUSTODY.VALUES
If the PERFORM.ACCRUAL field is set to 'DAILY', then T24 performs the Accruals on a daily basis.
Different date ranges specified in the CALC.TYPE field (PERIODIC.OPEN, PERIODIC.NORMAL and so on...) might
not have a bearing on the calculations if Daily Accrual is set.
Accruals are performed every day and posted to the Profit and Loss categories defined for the same. There
can be different Profit and Loss categories defined for Safekeeping charges, Depository charges and the
Management fees. Separate Accrual entries are raised for these different types of fees.
Set of entries raised for a Portfolio on a particular day in the fee cycle is shown in the below screen shot.

These entries are raised for Accrual of Safekeeping and Depository charges.
The contra entry to the above is a RE.CONSOL.SPEC.ENTRY (due pending capitalization) as shown in the below
screen shot:

RE.CONSOL.SPEC.ENTRY
The user can also configure the System to raise Accrual entries every day, by reversing the previous Accruals
booked (I/O method). The categories for which the reversals and re-booking are required is configured using
the ACCR.REV.PARAM application.

ACCR.REV.PARAM
I/O method of booking Accruals is been configured for the Management fee, Safekeeping fee and Depository
charge categories as shown in the above screen shot.

Example shown above

The accruals of earlier day are reversed and re-booked (including the current day accruals) in the above
example.
If the calculated fee is amended prior to posting, then the Accrual booked is also adjusted to the extent of
amendment.

Safe custody fees – Account balances for fee calculation

In general, Account balances are not considered for Safekeeping fee calculations. However, if there is a
requirement to include designated Account balances for the purpose of Safekeeping fee calculation, this is
done by configuring the same in SAFECUSTODY.VALUES record.

SAFE.CUSTODY.VALUES
Based on this set-up, all Accounts with currency ‘XAU', is now included for fee calculation. For example, if
metal trading is done for a Portfolio by using an ACCOUNT and holds the metal Account balance; and if Safe
keeping charges must be levied for these holdings, then this functionality can be used.

Safekeeping and Management Fees – Performing Daily Accruals

Daily accrual of fees can also be set-up for Safekeeping and Management fees. The user must first 'switch on'
the Daily accrual in SAFECUSTODY.VALUES record.
The Accruals are always for the exact number of days in the period. For example, if the charge period is from
1st January to 31st March 2007 and on Feb 10th; the Accrual will be for 41 days. On March 31st, the Accrual
will be performed for 90 days.
The EB.ACCRUAL application, stores the Accrual details as shown in the below screen shot.
 Example of EB.ACCRUAL
On realisation of the fee, the Statement entries are raised for debiting the Customer's Account. The contra for
the same is RE.CONSOL.SPEC.ENTRY for capitalization of fees. Prior to realisation of the fee, the anticipated
charge for the period is reflected in a 'F' entry, which is viewed in the STMT.ENTRY application.
After posting the fees, the 'POSTING STAGE' field in SAFEKEEP.HOLDING application is changed to 'Posted'.
 Example of SAFEKEEP.HOLDING
The Statement entry and RE.CONSOL.SPEC.ENTRY for the posting is shown in the below screen shot.

Example of a statement entry

Example of a RE.CONSOL.SPEC.ENTRY
Till the time of fee posting, the Accruals performed daily in the next calculation period, includes the fees
pending. Once the posting is done, the accruals are only for the current period fees.
If the calculated fee is amended prior to posting, then the Accrual booked is also adjusted to the extent of
amendment.
Where the DETAIL method has been defined in SCPM.GROUP.CONDITION or SCSK.GROUP.CONDITION, the
supporting detail for the fee calculation can be viewed in the SC.DAILY.ACCRUAL.DETAIL application.

Accruals of Safekeep
Accruals of Safekeep charges are posted in a separate identifiable Accrual PL Category codes.
The following field are available in SEC.ACC.MASTER application, to post the Accruals of Safekeep.
1. SAFEKEEP.ACCR.PL

Field Name Description

SAFEKEEP.ACCR.PL Accrual PL category for Safekeep

SAFEKEEP.ACCR.PL field in SEC.ACC.MASTER application

Overrides in SEC.ACC.MASTER
In order to exclude the Safekeep charges from valuations, the link between SAFEKEEP.CHRG.ACC and
ACCOUNT.NOS fields in SEC.ACC.MASTER application is removed.

Note: Override record is released with type as error, thereby giving flexibility to raise an error or override on Safekeep fees.

The SAFEKEEP.ACCT.ACCT field in SEC.ACC.MASTER application allows the user to have Internal Account of
different category, that are not specified in ACCRUAL.CATEG field of SAFECUSTODY.VALUES application.
 SEC.ACC.MASTER application raising an Override.

Discount on Safekeep Fees

Discount on Safekeep Fees is posted in a different PL category code in the SAFEKEEP.HOLDING application.
The following field is available in SAFEKEEP.HOLDING application, to post the discount on Safekeep.

Field Name Description

 DISCOUNT.PL
Profit loss category for discount
posting.
To be defaulted from
SAFECUSTODY.VALUES but can be
overridden.

DISCOUNT.PL field in SAFEKEEP.HOLDING appliaction.

Discount on Safekeep Holding Posted

Discount on Safekeep Fees is posted to a different PL category code in SAFEKEEP.HOLDING.POSTED
application.
The following field available in SAFEKEEP.HOLDING.POSTED application, to post the discount on Safekeep.

Field Name Description

 DISCOUNT.PL
Profit loss category for discount
posting.
To be defaulted from
SAFECUSTODY.VALUES but can be
overridden.

DISCOUNT.PL field in SAFEKEEP.HOLDING.POSTED application

Daily Safekeeping Fees - Instrument Level
1. Daily Estimate of Safekeeping Fees
• The system stores the daily fee and the cumulative estimate for the period till date. It takes into account the minimum and maximum fee
specified at an instrument or sub asset type or asset type level.
• The fee estimate is calculated, in local currency, on the closing position /value of the instrument for the day
• The fee estimate is done on all working days; the fee estimate on the last working date before the holidays includes the fee estimate for the
holidays as well (i.e. on Friday, the fee estimate will be for three days)
• No safekeeping fee is estimated for the day when the position is zero even if minimum fee is set up.
• The system stores both the daily fee estimate as well as cumulative safekeeping fee for the period till date.
• The fee estimate for the day: Balance/value * Daily fee % (the daily fee % is the annual rate/ Year days; Year days could be 360 or 365 or 366.
• When Month.Average method is set in SCSF.CHARGE.PARAMETER for the asset type and DAILY.EXTRACT & DAILY.FEE.ESTIMATE is marked as
YES in SAFECUSTODY.VALUES, the system builds daily balances in SC.SAFEKEEP.ACTIVITY.
• The AVG.AST.BAL field holds the weighted average balance based on which the fee is calculated.

Example:
Day 5 = Friday, Aug 30, Day 6 = Saturday, Aug 31, Day 7 = Sunday, Sept 01, Day 08 = Monday, Sept 02 (Non-
Business Day), Day 09 = Tuesday, Sept 03

Portfolio Security Day Units Price Closing Daily Cumulative

(€) (€) Balance Safekeeping Safekeeping
(€)* Fee (€)# Fee (€) @

123-1 EQ-A 1 1000 2.5 2500 .01400 .01400

123-1 EQ-A 2 1000 2.6 2600 .01456 .02856

123-1 EQ-A 3 1000 2.5 2500 .01400 .04256

123-1 EQ-A 4 1000 2.7 2700 .01512 .05768

123-1 EQ-A 5 1500 2.4 3600 .04032 .09800

123-1 EQ-A 6 1500 2.4 3600

123-1 EQ-A 7 1500 2.4 3600 .04032 .13832

123-1 EQ-A 8 1500 2.4 3600

123-1 EQ-A 9 1500 2.4 3600 .02016 .15848

# Daily Safekeeping Fee = Daily Safekeeping Fee (%)/100 x Closing Balance
Day 1: .00056/100 x 2500 = .01400
Day 5: 2 x .00056/100 x 3600 = .04032 (for days 5 & 6)
: 2 x .00056/100 x 3600 = .04032 (for days 7 & 8)
Day 9: 1 x .00056/100 x 3600 = .02016
@ Day 1 = Daily Safekeeping Fee (Day 1), Day 2 = Daily Safekeeping Fee (Day1+Day2) so on
Key :

- Non-working Days
2. Setup of Minimum / Maximum Safekeeping Fees at Asset Type / Sub Asset Type / Instrument Level
• The system allows setting up the minimum and maximum safekeeping fee at the security / sub asset type / asset type level
• If the safekeeping fee calculated for a security over a particular period is lower than the minimum specified for that security for that period,
the minimum safekeeping fee is applied
• Similarly if the safekeeping fee calculated for a security over a particular period is higher than the maximum specified for that security for that
period, the maximum safekeeping fee is applied
• The minimum / maximum safekeeping fees can be specified in different currencies
• A default currency can also be specified. If a minimum/maximum fee is not available in the local currency, the fee specified in the default
currency is used to convert into the local currency at the latest available mid-rate
• The minimum/maximum safekeeping fee specified is considered to be annual and is prorated for the calculation period
• The minimum / maximum is specified in SCSK.GROUP.CONDITION
• The CALC.METHOD must be ‘Detail’ in SCSK.GROUP.CONDITION for this record. It means the fee is calculated for each individual security and
summed up to arrive at the total fees.

Example:

Portfolio Security Currency Safekeeping Safekeeping Default

Type Fee / Fee / Currency
Annum Annum
(Minimum) (Maximum)

123-1 Shares USD 100 200 EUR

123-1 Shares EUR 80 160

123-1 Domestic EUR 40 80

Equity

123-1 EQ-A EUR 0 0

3. Estimating / Storing of minimum/maximum, total & day’s safekeeping fee at security level
 • The minimum / maximum, total and day’s safekeeping fee is estimated at the security level.
• These values are stored in SC.SAFEKEEP.ACTIVITY.

Example:

Portfolio Security Currency Safekeeping Safekeeping Fee Default

Type Fee Fee Applicable Currency
(Minimum) (Maximum)

123-1 Shares EUR 80 160 Annual EUR

Charge Frequency = Monthly (last day of month)

Day Basis = ACT/360
Local Currency = €
Last fee Calculation Date 30-11-2018

Business Dates
D1 = 01-12-18
D2 = 03-12-18
D3 = 11-12-18
D4 = 21-12-18

Portfolio Security Business Safekeeping Fee (€)

Date

Min Cum Max Cum Est Cum Total Day’s

(*) Min (*) Max Est (#) Fee
(&) (&) (&) (#)

123-1 EQ-A D1 0.44 0.44 0.88 0.88 0.3 0.3 0.44 0.44

123-1 EQ-A D2 1.77 2.21 3.54 4.42 2.0 2.3 2.3 1.86

123-1 EQ-A D3 2.22 4.43 4.44 8.86 8.00 10.30 8.86 6.56

123-1 EQ-A D4 2.44 6.87 4.88 13.74 4.00 14.30 13.74 4.88

It is to be noted that the system calculates the fee till the next working day. On 1st, it calculates for 2 days as
2nd is a holiday, on 3rd, for eight days and so on.
* Safekeeping Fee (Minimum)
D1 = (2/360)*80 = .44, D2 = (8/360)*80 = 1.77, D3 = (10/360)*80 = 2.22, D4 = (11/360)*80 = 2.44
* Safekeeping Fee (Maximum)
D1 = (2/360)*160 = .88, D2 = (8/360)*160 = 3.54, D3 = (10/360)*80 = 4.44, D4 = (11/360)*160 = 4.88
&
D1 = X (D1), D2 = X (D1+D2), D3 = X (D1+D2+D3), D4 = X (D1+D2+D3+D4)

# Total (denotes total fee estimate till date)

D1 = ∑Estimated < ∑Minimum, Total = ∑Minimum = .44,
D2 = ∑Minimum < ∑Estimated < ∑Maximum, Total = ∑Estimated = 2.30
D3 = ∑Estimated > ∑Maximum, Total = ∑Maximum = 8.86
D4 = ∑Estimated > ∑Maximum, Total = ∑Maximum = 13.74
Day’s fee (denotes incremental fee for the date)
D1 = Total 1 = .44, D2 = (Total) 2 – (Total) 1 = 1.86, D3 = (Total) 3 – (Total) 2 = 6.56,
D4 = (Total) 4 – (Total) 3 = 4.88

4. Backdated changes to security positions

• The system processes the backdated changes to the security positions in the current period
• The backdated transaction can be input after the opening of initial position for a security or before opening of initial position (e.g. Assume a
new instrument was purchased on 5th April; In case 1, a back dated transaction is input for 9th of April; and in case 2, a back dated transaction
has a date of 3rd April).
• The value is determined based on price and exchange rate as on the date of transaction.
• Thereafter, the position gets revised with the respective latest prices available for each day
• The system determines the revised security positions after considering the backdated transaction for all the days starting with the day of
backdated transaction
• The system estimates the daily safekeeping fee, cumulative safekeeping fee, total & day’s fee by comparing with minimum/maximum for a
security / instrument, on the revised security position. This is done for all the days starting from day of backdated transaction up to current
date
• As illustrated in the example below, the SC.SAFEKEEP.ACTIVITY contains records for dates 1, 2 and 3. The closing balance for day 1, 2 and 3 is
calculated based on the latest available price of the respective days and also the latest available mid-rate of those days. The historic prices are
from SC PRICE CHANGE.

Example: Backdated Transaction before opening of initial position

Portfolio Security CCY Day Annual Daily Base

Type Basis Safekeeping Safekeeping Amount
Fee (A) (%) Fee (A/360)
(%)
123-1 Domestic € ACT/360 .2 .00056 Market
Shares value

123-1 Domestic € ACT/360 .2 .00056 Nominal

Bonds Value

Portfolio Security Currency Safekeeping Safekeeping Fee Default

Type Fee Fee Applicable Currency
(Minimum) (Maximum)

123-1 Shares EUR 12 24 Annual EUR

Before Backdated Transaction

Portfolio Security Day Position Price ASSET.BAL.LCY FEE.EST.LCY CUM.FEE.LCY

(€) (€) (€) (€) (€) (€)

123-1 EQ-A 1 2.4

123-1 EQ-A 2 2.5

123-1 EQ-A 3 2.6

123-1 EQ-A 4 1000 2.5 2500 .01400 .01400

123-1 EQ-A 5 1000 2.7 2700 .01512 .02912

MIN.AMT.LCY CUM.MIN.LCY MAX.AMT.LCY CUM.MAX.LCY TOTAL.FEE. DAY.ACT.LCY

(€) (€) (€) (€) LCY (€) (€)
 .03333 .03333 .06666 .06666 .03333 .03333

.03333 .06666 .06666 .13332 .06666 .03333

Backdated Transaction at Day 1 for €2000

Portfolio Security Day Position Price ASSET.BAL.LCY FEE.EST.LCY CUM.FEE.LCY

(€) (€) (€) (€) (€) (€)

123-1 EQ-A 1 2000 2.4 2400 .01344 .01344

123-1 EQ-A 2 2000 2.5 2500 .01400 .02744

123-1 EQ-A 3 2000 2.6 2600 .01456 .04200

123-1 EQ-A 4 3000 2.5 7500 .04200 .08400

123-1 EQ-A 5 3000 2.7 8100 .04536 .12936

MIN.AMT.LCY CUM.MIN.LCY MAX.AMT.LCY CUM.MAX.LCY TOTAL.FEE. DAY.ACT.LCY

(€) (€) (€) (€) LCY (€) (€)

.03333 .03333 .06666 .06666 .03333 .03333

.03333 .06666 .06666 .13332 .06666 .03333

.03333 .09999 .06666 .19998 .09999 .03333

.03333 .13332 .06666 .26664 .13332 .03333

.03333 .16665 .06666 .33330 .16665 .03333

5. Setting up the validity period of safekeeping fee

• The fee schema is applicable from the beginning of the period till the end.
• In case the fee changes in the interim, a new fee record is created with the effective date from which the changes are effective.
• The date specified in the new record has to be a future date and has to be a working day; no modification (of rates, etc.) to the existing fee
schema is allowed.
 • A new dated record need not necessarily imply a change in safekeeping or minimum/maximum fee, but a change in fee necessarily creates a
new dated record. Example, a record can be created for a change of data other than fees (schema change for fee to be defined at instrument
level from sub asset type level).
• The fee is calculated taking into account the fee schema changes during the interim. Any minimum/maximum fee changes in the interim is
also considered.
• There can be multiple validity periods within a charge frequency or the same validity period can span across multiple charge frequency periods
• The same validity period applies to the safekeeping fee and the minimum / maximum safekeeping fee for all the security types of a portfolio /
customer. Therefore if the safekeeping fee or minimum / maximum for any security type needs to change, a new validity period record gets
created.
• The different validity periods of safekeeping fee along with minimum / maximum safekeeping fee for a portfolio / customer are available in
SCSK.GROUP.CONDITION
• A new validity period can be created by creating a new dated record for a portfolio / customer in SCSK.GROUP.CONDITION

Example

Portfolio Security Validity Period Daily Safekeeping Fee (€)

Type Begin Date

Minimum Maximum Fee

Rate
(%)

123-1 Shares 30-09-2018 .05 .1 .0005

123-1 Bonds 30-09-2018 .05 .1 .0005

123-1 Shares 01-12-2018 .05 .1 .0004

123-1 Bonds 01-12-2018 .05 .1 .0004

123-1 Shares 01-01-2019 .04 .08 .0004

123-1 Bonds 01-01-2019 .04 .08 .0004

6. Estimating & Storing the safekeeping fee at security level across fee schema changes
• The daily estimate of fee is calculated considering the current applicable fee schema (this includes the percentage of fee as well as minimum
and maximum fee).
 • If the fee schema changes in the interim, the fee estimate, for the remaining period, is calculated taking into account the new fee rates and
the minimum/maximum.
• The estimate of safekeeping fees & minimum/maximum for the period till change is based on old rates and from the validity date of the new
change, the new rates are effective.
• There can be multiple fee schema changes within a single charging frequency (say, of three months).
• If a security position is zero on a particular day, no minimum/maximum fee is estimated for that day
• All the fees are calculated in local currency.
• The estimated safekeeping (daily, cumulative till date and minimum/maximum fee) is stored at the security level for each business day
• These fee is for information purpose and does not get posted
• The recent record corresponding to SC.ACT.GROUP in CUSTOMER.CHARGE for a customer / portfolio is considered in SCSK.GROUP.CONDITION
for determining the validity period of the fee schema.
• The CALC.METHOD must be ‘Detail’ in SCSK.GROUP.CONDITION for these records
• These estimated values of safekeeping fee, day fee, minimum / maximum amounts are for information only with no posting of entries
involved.

Example
Fee Calculation Frequency = Monthly (last day of month)
Day Basis = ACT/360
Safekeeping Fee Setup

Portfolio Security CCY Validity Annual Safekeeping Fee

Type Period
Begin
Date Minimum Maximum % Base
(€) (€) Amount

123-1 Shares € 01-10- 18 36 .18 Market

18 value

123-1 Bonds € 01-10- 18 36 .18 Nominal

18 Value

123-1 Shares € 05-10- 14.50 29 .14 Market

18 value

123-1 Bonds € 05-10- 14.50 29 .14 Nominal

18 Value

Annual to Daily Conversion

D = A/360
 Annual Safekeeping Fee (A) Daily Safekeeping Fee (D)

Minimum Maximum % Minimum Maximum %

(€) (€) (€) (€)

18 36 .18 .05 .1 .0005

14.50 29 .14 .04 .08 .0004

Business Days:
D1 = 01-10-18, D2 = 02-10-18, D3 = 05-10-18, D4 = 6-10-18
Last Charge Date = 30-09-2018
Next Charge Date = 31-10-2018

Security Business Closing Safekeeping Fee (€)

Days Market
Value
(€) Min Cum Max Cum Est Cum Total Day’s
(*) Min (*) Max (#) Est (@) Fee
(~) (~) (~) (&)

EQ-A D1 3000 .05 .05 .10 .10 .015 .015 .05 .05

EQ-A D2 3000 .15 .20 .30 .40 .045 .060 .20 .15

EQ-A D3 5000 .04 .24 .08 .48 .02 .080 .24 .04

EQ-A D4 5000 1.04 1.28 2.08 2.56 .52 .600 1.28 1.04

* Minimum Safekeeping Fee

D1 = .05*1 = .05, D2 = .05*3 = .15, D3 = .04*1 = .04, D4 = .04*26 = 1.04
* Maximum Safekeeping Fee
D1 = .10*1 = .10, D2 = .10*3 = .30, D3 = .08*1 = .08, D4 = .08*26 = 2.08
#
D1 = (.0005/100)*1*3000 = .015, D2 = (.0005/100)*3*3000] = .045
D3 = (.0004/100)*1*5000 = .02, D4 = (.0004/100)*26*5000 = .52
~
D1 = X (D1), D2 = X (D1+D2), D3 = X (D1+D2+D3), D4 = X (D1+D2+D3+D4),
@
If ∑Estimated < ∑Minimum, Total = ∑Minimum, If ∑Estimated > ∑Maximum, Total = ∑Maximum
If ∑Minimum < ∑Estimated < ∑Maximum, Total = ∑Estimated
D1 = ∑Estimated < ∑Minimum, Total = ∑Minimum = .05
D2 = ∑Estimated < ∑Minimum, Total = ∑Minimum = .20
D3 = ∑Estimated < ∑Minimum, Total = ∑Minimum = .24
D4 = ∑Estimated < ∑Minimum, Total = ∑Minimum = 1.28
&
Day’s Fee1 = Total1
(Day’s Fee) n = (Total) n – (Total) n-1
D1 = Day’s Fee1 = Total1 = .05
D2 = (Day’s Fee) 2 = (Total) 2 – (Total) 1 =.15
D3 = (Day’s Fee) 3 = (Total) 3 – (Total) 2 =.04
D4 = (Day’s Fee) 4 = (Total) 4 – (Total) 3 =1.04
.

Published on: 06/05/2019