Create a Repurchase Contract

Security Note: You need the following security rights for this activity:

  • Allow contract maintenance in the Contracts domain security rights group
  • Allow the user to maintain hedge actions in the Accounting user group security rights group (if hedging the open action immediately)

Activity Steps

  1. Open the Contract Explorer.

    Note: Repurchase contracts can also be created via the Contracts tab of the Organisation, Company or District.

  2. Right-click in the Contracts table and select New » Repurchase Contract from the menu.

    The Repurchase Contract Creation screen displays.

    If the contract is created from the Organisation, Company or District, applicable fields are preselected and read-only.

  3. Complete the following fields as required.
    • Contract Category—Select from the Contract Category list items defined in the List Editor. The Contract Category text list items can be used to limit access to contracts through domain security. See Domains.
    • Bank—Select from the organisations defined on the Organisations panel of the Solution Explorer that have the Organisation Role of Banks.
    • Company—Select from the companies defined on the Organisations panel of the Solution Explorer.
    • District—Select from the districts defined on the Organisations panel of the Solution Explorer.
    • Start Date—The default start date is the first day of the current month.
    • Maturity Date
    • Product—Select from the products that are Allowed Products of a package type.
    • Quantity
    • UOM—Select from the Mass units defined in the Unit Conversion Editor.
    • Price—Used for two prices:
      1. Fixed pricing for the repurchase contract. See Enter Pricing for a Repurchase Contract.
      2. If the open action is hedged immediately, the strike price at which the market commodity is bought or sold for the hedge position, in the nominated currency and unit of measure. The strike price is the settlement Exercise Price for hedge positions with the Price Type set to Fixed.
  4. To hedge the open action immediately:
    1. Select a Market Commodity from the (physical) market commodities configured in the Market/Commodity Editor.
    2. Update the Transaction Type if required. Whether the hedge position is being bought or sold in the marketplace.
    3. Select the Hedge Maturity Date. If left blank, the maturity date of the repurchase contract is used.
    4. If the contract type is Options:
      1. Update the Option Type if required. Select from:
        • Call—The buyer of the options contract has the right to buy the commodity.
        • Put—The buyer of the options contract has the right to sell the commodity.
      2. Select the Declaration Date. Must be a future date that is before the maturity date.
      3. Update the Settlement Method if required. Settlement method to determine the quotation period (QP) of the options contract. Select from the settlement methods configured in the Market/Commodity Editor.
      4. Select the Fixed QP Start Date and Fixed QP End Date if required. Only applicable to options contracts with a settlement method that has a fixed QP.
      5. Enter the Premium. The quoted premium for an options contract in the specified Premium Currency per market commodity contract and per Premium UOM. For example, if the premium is quoted as USD 3 per troy ounce for silver, and the market contract quantity for the commodity is 100 troy ounces, and an options contract is created for 4 contracts, the total premium paid is USD 1,200. The total premium is included in valuations and the settlement for the options contract. The total premium is paid even if the options contract is withdrawn.
    5. If the contract type is Futures, enter the Premium. The premium affects the net margin price for the futures contract. See Margin Price Calculation.
  5. Click OK.

    The Repurchase Contract displays.

    One open action is created for the full quantity. If the open action is hedged, the hedge position displays on the Hedge tab.

  6. Update the following fields of the repurchase contract if required.
    • Currency—Select from the currencies defined in the Currency/Exchange Editor.
    • Description
    • Exchange Rate Source—Determines the exchange rate of pricing and cost currencies to the currency of the repurchase contract. If actual exchange rates are not available, forward exchange rates can be used in repurchase action snapshots to estimate future currency values. This exchange rate estimation method must be enabled and selected in the despatch order snapshot settings. See Specify Snapshot Settings. Alternatively, fixed exchange rates can be specified for pricing and for each cost. Select from the exchange rate sources defined in the Currency/Exchange Editor.
    • Exchange Rate Method—Select from:
      • Average Quotation Period—The exchange rates for the quotation period (QP) are averaged, and the result is used to convert the price value into the currency of the QP.
      • Daily Quotation Period Average—The price value is converted into the currency of the QP for each day of the QP, and these converted values are then averaged.
      • Date Of Invoice
      • Previous Month Average
      • Last Day Of Previous Month—Uses the last business day of the previous month if a calendar is specified for the exchange rate source. If multiple calendars are specified, the last business day common to all calendars is used.
      • Day Before Invoice Date—Uses the last business day before the invoice date if a calendar is specified for the exchange rate source. If multiple calendars are specified, the last business day common to all calendars is used.
      • Last Known Exchange Rate
      • Action Date—If the action date is a non-working day in the applicable calendar, uses the exchange rate from the previous business day.
      • Day Before First Invoice Date—Uses the last business day before the date of the first commercial invoice if a calendar is specified for the exchange rate source. If multiple calendars are specified, the last business day common to all calendars is used.
  7. Edit the following fields of the open action if required.
    • Action ID
    • Date—Must be between the start date and maturity date of the contract.
    • Required Number Of Packages—Can be used to estimate costs based on the number of packages until packages are allocated to the open action.
    • Required Quantity
    • Comments
  8. Edit other fields of the hedge position if required. Refer to the following activities for information:
  9. Click Save.