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      Understanding Funds Available

      Funds Available determines the amount of money in a given currency (or on a combined currency level) that can be paid out immediately. This article explains how available funds are calculated in Kooltra.

      A counterparty has a balance in a particular currency. Are those funds available to be used? Can they be sent out or are they:

      (1) tied up for margin?

      (2) already paid out but for a future date?

      (3) already reserved for a request for another payment?


      As you may have seen in the Configuring Funds Available page, there are multiple possible configurations in Kooltra for whether or not these factors are taken into consideration when calculating Funds Available, but at a high level the calculation follows three steps:

      1. Calculate Vostro Funds Available 

      2. Calculate Account Funds Available

      3. Calculate Total Funds Available per currency, per counterparty

      Vostro Funds Available

      The first step in calculating the funds available amount is at the Vostro level. The generalized formula for this is:

      Vostro Funds Available = 

      (Vostro Balance) - (Cash Held Against Future Trades) + (Future Cashflow Receipts) - (Future Cashflow Payments) - (Pending Payments) + (Pending Receipts) +/- (Value of Trades Settling Today)


      Where...

      Cash Held Against Future Trades is
      Determined by the ‘Hold Cash for Future Trades’ funds available setting. If enabled the incoming cashflows booked against a trade that is settling in the future would be held back.

      Future Cashflow Receipts is
      Determined by the ‘Include Future Cashflow Receipts’ funds available setting. If enabled, incoming cashflows that have been processed and will be received are included. Example use case is a next day PAD, where file is loaded to bank today and funds are pulled tomorrow. This setting allows you to assume the funds will come in.

      Future Cashflow Payments is
      Determined by the 'Include Future Cashflow Payments' funds available setting. If enabled, then payments that have been released for a future date would be excluded from the balance.

      Pending Payments is
      Determined by the ‘Include Pending Payments’ funds available setting. If enabled, then all pending payments (requested, not released) will be held back.

      Pending Receipts is
      Determined by the ‘Include Pending Receipts’ funds available setting. If enabled, then all pending receipts (expected, not received) will be held back.

      Value of Trades Settling Today is
      Determined by the ‘Include Trades Settling Today’ funds available setting. If enabled, then the value of today’s trades will be added / subtracted from a clients balance when determining funds available.

      Account Funds Available

      The second step in calculating the funds available amount is at the Account level. The generalized formula for this is:

      Account Funds Available = 

      (Cash Balance) - (Margin Required Base) - (Unrealized Loss) + (Unrealized Profit)


      Where...

      Cash Balance is
      The value of all cash held by the account converted back to entity base currency

      Margin Required Base is
      Determined by the ‘IncludeMarginRequiredBase’ funds available setting. If enabled, hold back margin required from available funds.

      Unrealized Loss is
      Determined by the ‘IncludeUnrealizedLoss’ funds available setting. If enabled, hold back unrealized losses from available funds.

      Unrealized Profit is
      Determined by the ‘IncludeUnrealizedProfit’ funds available setting. If enabled, add the unrealized profit value back into the available funds (i.e. give client credit for the unrealized profit)

      Calculate Funds Available

      Having calculated the Vostro Funds Available and Account Funds Available, we then calculate the total funds available based on the configuration of the funds available setting EnforcePositiveAccountBalance.

      If EnforcePositiveAccountBalance= TRUE then:

      For a particular Vostro (i.e. for a particular currency for a particular counterparty):

      Step 1 - Calculate Vostro Funds Available. This result is in vostro currency

      Step 2 - Calculate Account Funds Available. This result is in entity currency. Use the rate from vostro.BalancetoEntityBasePair to convert back to vostro currency.

      Step 3 - Take the MIN of the 2 values calculated in steps 1 and 2. This ensures that the amount that can be paid out in the currency can not end up taking the overall account balance negative.

      Step 4 - Take the MAX of the ‘MIN’ value and 0 (i.e. if the funds available calculation returns a negative number, it will be outputted as zero)

      If EnforcePositiveAccountBalance= FALSE then:

      For a particular Vostro (i.e. for a particular currency for a particular counterparty) calculate Vostro Funds Available. The result is the funds available (in vostro currency).