Set Cash Flow instruments on Portfolio Instrument
The cash instruments (restricted to the trading currency of the Portfolio instrument) that will be used to move cash to, when an investor buys into a Portfolio instrument, or move cash from, when an investor sells a portfolio instrument, can be set on the Portfolio Instrument.
The following cash flow instrument fields can be set on a Portfolio Instrument:
| Field | Description |
|---|---|
| Buy cash flow instrument | The cash instrument used to move cash to when an investor buys into the Portfolio Instrument. |
| Sell cash flow instrument | The cash instrument used to move cash from when an investor sells/switches out of the Portfolio Instrument. |
| Internal switch cash instrument | The cash instrument to be used specifically when an internal switch is performed between two Portfolio Instruments with the same dealer/custodian/instrument provider. If this field is left empty, the system will use the Sell cash flow instrument for the sell leg and the Buy cash flow instrument for the buy leg, as per normal behavior. |
Why is the Internal Switch Cash Instrument needed?
- On a Composed Contract (e.g. an Living Annuity), investors typically buy and sell from a contract-level cash instrument, while annuity payments are made from the portfolio instrument’s cash flow instrument.
- When switching between two Portfolio Instruments (e.g. LA1 -> LA2), the system would ordinarily route cash through the Buy/Sell cash flow instrument. However, for an internal switch where the dealer/custodian/instrument provider is the same on both portfolio instruments, it is more efficient to simply move the cash directly from the sell leg to the buy leg — without routing through the Buy/Sell cash flow instrument.
- By setting the Internal switch cash instrument on each Portfolio Instrument, this unnecessary routing is avoided.
NOTE:
- Do not change these cash instruments while instructions are in progress for the relevant Portfolio Instrument. If need be, cancel instructions in progress, make the change to the cash flow instruments and load the instruction again.
- The Internal switch cash instrument field is only applied when the internal switch is between Portfolio Instruments with the same dealer, custodian and instrument provider.
- If the Internal switch cash instrument is not set, the system falls back to using the Sell cash flow instrument (sell leg) and Buy cash flow instrument (buy leg) as per normal behavior.
Last Updated on 1 month ago by Tinus Burger