Net off cash flows on Instrument Instructions

The cash flows on buys and sells on all classes in Collective Investment Schemes (CIS), where ‘Should net off settlement?’ has been ticked on the Collective Investment Scheme can be net off. The following requirement must also be met, the instrument instructions must have the same payment buy bank account and the Custodian needs to be the same. (The payment buy account being the to instrument account’s buy bank account on an instrument buy instruction, and the from instrument account’s buy bank account on an instrument sell instruction).

Go to the relevant CIS and select ‘Should net off settlement’

This option eliminates the need to make payments to the dealer for buys and receive payments from the dealer for sells within instrument classes in the same collective investment scheme.

Confirm instrument instructions as per contract notes, the status of the instructions (Contract note for buy or Contract note for sell) will be ‘Allocated Not Paid’.

Go to Bulk Processes->Dealer Instructions->More Actions

Select ‘Allocated not paid’ and search

You can use the tick-boxes in front of the instrument instructions to limit the instrument instructions to be included in the Net-off. This is however not required as the system will only net-off instrument instructions that comply with the requirements as explained in the first paragraph.

After selecting Net-off cash flows, click into the transaction date of a net-off instruction

Scroll down to the cash reconciliation section

The deposit amount can be manually matched here

All instrument instructions in the net-off will be in status confirmed

The same matching process can be followed for payments already made. Alternatively a payment batch can be created

See Netoff for the setup used in this help file.

More Examples

Example A:

Buy for R 50 000

Sell for R 60 000

Since the sell amount exceeds the buy amount, a payment of R 10 000 from the dealer can be expected.

Example B:

Buy of R 70 000

Sell of R 30 000

Since the buy amount here exceeds the sell amount, a payment needs to be made to the dealer of R 40 000.

NOTE: Where instruments to which net-off applies are in status Allocated not paid, the payment amount will only appear on the instruction after Net-off cashflows have been selected. This would also be the case if there is actually only one instrument instruction to which net-off applies.

Also see Viewing net-off instrument instructions

Last Updated on 1 year ago by Debra Hart