Nettings settings

Netting settings determine the rules for offsetting financial obligations between the broker and clients.

Click + in the settings list to create a new netting setting.

In this section you can also set Conversion rules for netting.

The DEFAULT netting setting is used in technical accounts such as Nominal.

General

In the General section, it is necessary to set the Name for the setting, the Base currency - the currency to which all revaluations are set by default, and select the swap type - Close by AVP, Open by AVP or Close by market. It is also possible to specify a particular Nominal account for settlements.

The account's base currency affects the default currency in which the client sees the revaluation of their assets, as well as the currency in which daily reports are generated for them.

Swap types:

• Open by AVP - the rate is selected in such a way that there is a movement of funds at the actual cost of the swap (provided that there were no trades closing/reducing the position on that day).
• Close by AVP - the rate is selected in such a way that there is no movement of funds (provided that there were no trades closing/reducing the position on that day).

Formulas for calculating the cost of swaps with the Close by AVP setting are given in the article Swap calculation.

• Close by market - Open rollover rate = current rate of the market pair (instrument). Top of the book price is used.
• Close by avp with EOD rate - works similarly to the Open by AVP setting, but if the swap rate is specified in the system as a percentage, the closing price of the day is used to calculate the swap price instead of the AVP of the position.

Base currency additional information: The account base currency does not mean that cash in and cash out can only be done in this currency. The account can be multicurrency.

Conversions

The block displays all the conversion rules configured in the netting configuration:

Click Add new conversion to create new conversion for the netting setting.

The Category of instruments defines for which instruments PL on trades will trigger auto-conversion. The following instrument categories are available for selection:

• Cash
• Equity
• Futures
• Bonds
• Options
• Forex

Select the Netting type - P/L, commission, settlement. For autoconversion to work, it is necessary to have an exchange rate for the currency pair, which contains the settlement currency of the trade and the Asset which is also set in the conversion rule. Dividend and Tax payment netting types are only available for particular instrument categories, for example - EQ.

Sub type of netting should be selected if there is a need to settle only certain transactions, e.g. commissions.

Category for rates: you can select several categories in this field, among which the system will search for conversion rates.

The Asset field determines the currency into which nettings for trades of the specified category will be converted.

Conversion rates account - when this setting is enabled, conversions on accounts using the specified netting settings will use rates from a specific account. If the conversion rate on the specified account is expired (has reached TTL), the standard rate setting algorithm will be used.

Here also the Timeout can be set. It defines period of time after which the last arrived quote for the CASH-instrument is valid for auto-conversion.

Use EOD rates fallback - if this option is enabled and the system for some reasons has not found a suitable conversion rate - it will use the previous day's closing rate for this currency pair.

When the Trade date conversion setting is enabled, conversions will be created in the system on the trade date instead of the value date.

The Use mid rate setting allows to use the average rate between the ask and bid price of the instrument for conversions.

The Use trade time rate setting allows to use the instrument price at the time of the trade (taking into account the trade side) for conversions.

Please note! Once you finish editing the conversion rule, click the Add rule button to add it to the current netting setting.

Transactions

In this block, you can set up separate Nominal accounts to reflect different transaction types and subtypes.

To add a new setting, click Add transaction type accounts and specify the Transaction type, Transaction subtype, and Nominal account.

A specific transaction type and subtype combination can only be linked to one account. If all transaction subtypes should be selected, leave the subtype blank.

If an account for a specific transaction type/subtype is not selected, the account selected in the Nominal account field is used. If the account is not specified in the field, the broker's default Nominal account is used.

Options

• Auto-netting - when enabled, netting (PL) for transactions occurs on the closing date of the trade (for non-deliverable instruments) or instantly (for deliverable instruments) for the full trade amount, regardless of the actual settlement date. This means that even if the value date is set to the actual date, the transaction will be formed at the time the trade occurs, and the client can withdraw funds at any time.

Please note Using the Auto Netting may occur cash gaps, because you top up money to the client account before the value date, the current balance will be changed in the account instantly and the client can withdraw funds at any time.

• Promote external commission - external commissions can either come from the liquidity provider or be defined manually. If this checkbox is enabled - the commission will be created for the client in two separate transactions: with brokerage and external commission. If this checkbox is disabled, the client will receive all external and brokerage commissions as a single transaction, i.e. a trade commission will be created on netting.

• If the option Convert FX to CASH is enabled, trades on FX-instruments will be converted to trades on the corresponding CASH-instruments, the trade on FX-instrument will not be opened and the funds will be immediately transferred to the account balance (section Assets).

Example: you buy 1000 EURUSD at a rate of 1.1, after the order is executed, 1100 USD will be credited from your account and 1000 EUR will be immediately debited to your account.

• Convert CFD FX to CASH - this option is identical to Convert FX to CASH, but applies to Currency CFDs and Cryptocurrency CFDs.

• Intraday Swap - if this option is enabled, the system will ignore the tenor value dates and will swap positions on the trade date.

Triple swap charge:

For the .SPOT tenor with Intraday swap enabled, the triple swap will be charged on Wednesday with the value date moved to Monday, with Intraday swap disabled, the triple swap will be charged on Thursday with the value date moved to Monday.

For the .TOM tenor with Intraday swap enabled, the triple swap will accrue on Thursday with the value date moved to Monday, with Intraday swap disabled, the triple swap will accrue on Friday with the value date moved to Monday.

For a tenor .TOD with Intraday swap enabled, the triple swap will accrue on Friday with the value date moved to Monday, with Intraday swap disabled, the triple swap will accrue on Friday with the value date moved to Monday marked Intraday swap = Yes. {.is-warning}

Delayed settlements - when checked, mandatory settlements become optional. The functionality is designed for OTC (over-the-counter) settlements, as in this case, settlements may occur later than the value date specified in the transaction.

If the Cash netting by trade checkbox is enabled, conversions and nettings are removed when canceling CASH insturments trades with the Delete with conversions and nettings option enabled.

When the Last work day of month commission setting is enabled, Commission transactions are generated on the last business day of the month. Accordingly, changes to the account's Cash balance indicator occur on that day.

Do not settle option premium - the setting enables the logic of non-deliverable options, and the account indicators are changed:

• Assets market price of the account is always zero;
• Future cash flow of the account is equal to the P/L of the position;
• Unrealized P/L is equal to the estimated unrealized P/L of the open position (without the setting enabled, it is zero);
• The type of account positions is changed from Leverage to Margin.

Close short positions on assets - this setting allows to sell an asset that isn't yet on the account's balance but is expected to be available in the future. For example, if a client bought the equity, but its settlement occur after two days, it still can be sold immediately. This creates additional risks for the broker, as they may temporarily assume obligations for the client.

Group netting by instrument - when this setting is enabled, nettings for each instrument with the same value date will be grouped into one in the Daily operations section. If Auto netting is also enabled, any nettings that are already pending to be processed must be deleted. After the deletion, one grouped netting will be formed.

Disable dividend payouts for CFD EQ - if this setting is enabled, the system does not generate dividend trades on new positions with CFD instruments.

CFD dividends payout based on ex-dividend date: When enabled, dividends can be paid on the ex-dividend date. The payout amount is determined by the position amount at the end of the previous day (relative to the ex-dividend date). If dividends are to be accrued on a date that has already passed, the days in the Daily operations section must be reopened before that date.

When the Convert CFD/EQ to EQ setting is enabled, trades on CFD/EQ instruments are converted to EQ. This allows the broker to flexibly hedge with the provider's stocks while correctly accounting for costs using the configured Funding rates.

Example of mechanism implementation: The Convert CFD/EQ to EQ setting is enabled in the provider's netting settings. The execution of trades on CFD/EQ in the provider's account results in the opening of a position on the deliverable instrument; Interest rates are zero, meaning the swap price on such instruments is also zero; Funding rates are set for the quoted assets; The Tariff of the client account specifies the swap markup for the instruments, and the Zero funding setting is enabled. Thus, the client's position on the CFD is swapped according to the established Swap markups, and on the provider's account, the accounting is carried out in relation to the negative balances of the quoted asset of the delivery instrument in the portfolio.

Client conversions rule

This subsection allows you to configure client transfer rules between your accounts.

In order for the rule setting to work, it is necessary to select an account of Nominal type. If conversion is required, this account will reflect each pair of transactions (credit of currency of the sender, debit of currency of the recipient).

Client rate TTL - the frequency of the rate update from the moment it is received by the client. Source rate TTL - the client will not receive a rate that exists in the system longer than the specified time.

Please note! If two accounts with different TTL settings are used for a transfer, the settings of the account from which the transfer is made will be used for the operation.

Please note! In order for the configured client conversion rules to work, it is required that the user performing the transfer between accounts has the Client internal transfer permission in his Role.

Payment enabled - if enabled, funds are converted to the currency specified in the netting settings as the Base currency during deposits and withdrawals within the Payment Strategy used by the trading account.

Transfer enabled - allows to enable the conversion of funds to the account's base currency when transferring between own accounts.

With Payment enabled and Transfer enabled enabled, the account specified as the Conversion rates account in the netting settings is used for conversion. If such an account is not specified, the current market rate for the instrument is used.

By clicking Duplicate a copy of the current setting can be created.

To save new or edited setting click Save in the bottom right of the screen, Cancel to cancel the changes and Show usage to view on which accounts this setting is used.

In edit mode, a setting can be deleted by clicking the Delete button.