DEALING ROOM TRANSACTIONS:
The transaction flow in the dealing room is as follows:
All transactions in the dealing room can be classified as either:
• Merchant transactions entered into with customers of the bank and
• Interbank transactions undertaken with other banks or institutions.
Merchant Transactions: Customers of the bank continuously approach the bank for rates
for various types of transactions. Either Card or Ready rates are applied depending on the
volume of each transaction. Every deal is reported to the dealing room where it is recorded
into the respective currency position. The impact of the deal on the funds position and
forward gaps is also recorded separately. The evolving open currency position is offset
through opposite transactions in the interbank market. These are called ‘Cover
transactions’. All merchant deals are customised in nature.
Interbank transactions: Such transactions are undertaken either to. ‘Cover’ merchant
transactions to lock the profit margins or represent proprietary, trading or speculative
transactions done in keeping with the view of the dealer, regarding anticipated rate
movements. All such transactions are conducted at interbank rates and are standardised
in nature. Interbank deals are classified in terms of their settlement maturity ie: Cash, Tom,
Spot or Forward.
Irrespective of the nature of the transaction, they are each recorded in ‘Deal Slips’
providing full particulars and forwarded to the Mid – Office This section processes each
deal slip against all control parameters specified by the management. The deal slip then
gets forwarded to the Back – Office.
In addition to verification of adherence to the control limits the mid office also maintains a
‘Rate Scan System’. Market rates are recorded at fixed intervals to cross check that deals
have been done at reasonable rates and that there are no wide variations from the market
rates at the corresponding deal timings.
Dealing Rooms in India are now required to maintain ‘Voice Recording Systems’. Most
deals are concluded verbally on ‘Over-the-phone’ (OTP) basis and are therefore subject to
mis-understandings, mis-interpretations and disputes. Therefore all conversations in the
dealing room between banks, bank and brokers, with customers, branches and between
dealing staff are recorded and stored for minimum six months. These records are kept to
verify the stand taken by market participants in the case of disputes, litigations etc.
The back-office is the administrative section where the deal is actually processed. Each
deal is recorded in term of maturity, confirmed with counterparties, settled through receipt /
payment of respective currencies etc. All statistical and regulatory returns are compiled by
DEALING ROOM TRANSACTIONS: