Defining Legal Entities

A legal entity represents an organization that plays a role in a trade.

Your organization is identified with the role ProcessingOrg, while the other side of a trade is identified with the role CounterParty. Other roles are also available for legal entities related to a trade such as agents for payments, issuers, market places, etc.

The roles of a legal entity control what type of activity the legal entity can carry out within the system.

Legal entities can be organized in a hierarchical manner to match actual business units within an organization.

From the Calypso Navigator, navigate to Configuration > Legal Data > Entities (menu action refdata.BOLegalEntityWindow) for defining legal entities.

Legal Entity window

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Legal entities are identified by their short name throughout the system.

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You can specify user-defined attributes for selection and reporting purposes.

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You must define contacts for message generation and payment generation. Refer to the Calypso Messages User Guide and to the Calypso Settlements User Guide for details.

 

1. Creating a Legal Entity

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Click New to create a new legal entity, and enter information into the fields as applicable. The fields are described below. A legal entity is identified throughout the system by its short name.

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Click Save to save your changes.

You can also click Save As to save the legal entity as a new legal entity. You will be prompted to enter a new short name.

Note that if the Authorization mode is enabled, an authorized user must approve your entry.

See Sample Legal Entities for examples of legal entities usage.

You can use the Legal Entity Report to view existing Legal Entities.

See Legal Entity Report for details.

 

Fields Details

Fields	Description
Short name	Enter the short name that will identify the legal entity throughout the system.
Full Name	Enter the full name of the Legal Entity.
Parent	Click ... to select the parent of the Legal Entity if any. Used when the Legal Entity is the subsidiary of another Legal Entity for example. This allows creating a hierarchy of legal entities. Note that the parent legal entity must have already been saved (any legal entity can be a parent). Legal entities in the hierarchy inherit configuration information from the parent organization such as settlements instructions.
Country	Select the country of the Legal Entity.
Inactive As From	Enter the date from which the Legal Entity is disabled, i.e. you can no longer trade with it. It can be used for example in case of a merger between two existing Legal Entities. You create a third one (the new Legal Entity resulting from the merger) and deactivate the old Legal Entities.
User	Displays the name of the user who created the Legal Entity.
Entered date	Displays the date and time when the Legal Entity was created.
External Ref	Enter an external reference for the Legal Entity, optional. It can be used for selection and reporting purposes.
Holidays	Click ... to select the holiday calendar that applies to this Legal Entity.
Financial / Non Financial	Click Financial or Non Financial. This is mostly for information purposes. However, for swift messages, if you have selected the Payment template we generate MT202 messages for financial recipients, and MT103 messages for non financial recipients.
Status	Select the status of the Legal Entity: • Enabled – Available for trading. • Disabled – Unavailable for trading, i.e. you cannot select it from the trade window. • Pending – Available for trading but you will receive a warning when saving the trade. Access permission functions can be used to allow the creation of legal entities with a specific status.
Role(s)	Click ... to select the roles of a Legal Entity. The roles control what type of activity the legal entity can carry out within the system, and constitute therefore sensitive information. You can click Add to add more roles to the list. Note that user-defined roles are used for information purposes only, unless custom processes have been implemented. Calypso-provided roles: • Agent – A legal entity that receives or sends cash or securities: nostro, custodian, clearing house, etc. Used in SDI specification. • Broker – A legal entity that receives fees. Used in trade windows. • BuySide – A legal entity that is NOT a calc agent. Used in CDS Trades. • Calculation Agent – A calculation agent for a debt issue. Used in the Issuance Trade window, in Bond Product (Domiciliation module), and can be used also as valuation agent in Margin Call Contracts. • CCP (Central Clearing Counterparty) – A legal entity that enables members to settle cross-border trades. • Clearer – A clearing house for futures and options. • Counterparty – A participant in a trade: internal and external trading partners. • Fund – A hedge fund. • Guarantor – A referee in the event of a disagreement about a trade's rate reset or other payment detail, for IRD trades. The calculation agent will be designated in a legal agreement such as an ISDA agreement. • IPA – An issue-paying agent for debt issuance. Used in the Issuance Trade window and in the Bond Product window. • Investor – Used for information purposes only. • Issuer – The issuer of a debt issue. Used for bond products and CRD trades. • Lead Manager – A legal entity that has primary responsibility for organizing a given bond or credit issuance. • Market Place – A market place, either physical or electronic, that brings together buyers and sellers of securities. • Matching System – A legal entity that provides centralized real-time trade, settlement and confirmation matching facilities. • Processing Org – A legal entity that identifies your organization. • Provider – A legal entity involved in a CFD contract. • Reference Bank – A financial organization authorized to provide quotes. Used in cash settlement definition. • Sales Location – A legal entity that is used for location of sales margins. • Subsidiary – A legal entity that is controlled or fully owned by another legal entity. Used in trading windows. • Syndicate Manager – A managing underwriter or lead manager of a syndicate created for underwriting a new issue. • Triparty Agent – An intermediary for sellers/lenders and buyers/borrowers of repos and sec lending trades. Used in MT569 processing. • Trustee – A trustee for a debt issue. Used in the Issuance Trade window and in Bond Product (Domiciliation module).
Disabled Role(s)	This area only appears if domain "LegalEntity.ShowDisabledRoles" contains Value = true. Roles that have been disabled are shown here in red. Roles can be disabled using Main Entry > Configuration > Legal Data > Disabled Roles (menu action refdata.RoleDisabledWindow). » Select a legal entity, a role and a processing org, and click Save to disable the selected role for the selected legal entity.
Comment	Enter a comment if desired.
LE Id	Unique id number given by the system when the legal entity is saved.

 

Sample Legal Entities

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Processing Organization – A processing organization represents an entity within your organization. It must be defined with the role ProcessingOrg.

A processing organization owns trading books that hold the activity of your organization.

Sample book definition

All the back office configuration is based on the processing organization.

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Counterparty – A counterparty represents the other side of a trade. It must be defined with the role CounterParty.

Sample trade

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Internal Counterparty – An internal counterparty represents an entity on the other side of a trade that is also part of your organization. An internal counterparty must be defined with both roles ProcessingOrg and CounterParty. Setting an internal counterparty on a trade allows capturing an internal trade.

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Agent – An agent is an entity that holds a settlement account. It is used to specify the settlement instructions of your processing organizations, and the settlement instructions of your counterparties. It must be defined with the role Agent.

Sample settlement instruction definition

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Customer – A customer is an entity for which your organization is the custodian. Refer to the Calypso Client Custody Management User Guide for complete details.

 

2. Modifying a Legal Entity

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Click Load to load an existing legal entity from the Legal Entity Chooser window. Type in the beginning of the name and hit Enter. All the names that start with the fragment you typed will appear in the list at the right. The search is case insensitive.

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You can click Update Short Name to modify the short name of the legal entity. You will be prompted to enter a new short name.

Note that the new short name will be reflected everywhere the legal entity is used. You need to update integration procedures however, if any.

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Click Save to save your changes.

Note that if the Authorization mode is enabled, an authorized user must approve your entry.

 

3. Deleting a Legal Entity

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Click Delete to delete a legal entity. You can only delete a legal entity that is not in use.

Note that if the Authorization mode is enabled, an authorized user must approve your entry.

 Ⓘ   [NOTE: A legal entity in use cannot be deleted, however it can be disabled - You can modify a legal entity short name, it may impact integration procedures however if any - A role in use cannot be removed from a legal entity - If you modify or delete a contact, it will impact SDIs and messages based on that contact, you will need to reprocess the trades - If you modify or delete legal entity attributes, it will impact filters and reports based on these attributes]

 

4. Specifying Legal Entity Attributes

Legal entity attributes can be used for selection and reporting purposes. They are entirely user-defined.

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Load a legal entity then click Attributes to specify legal entity attributes as applicable.

You can also set legal entity attributes using Configuration > Legal Data > Attributes (menu action refdata.BOLegalEntityAttributeWindow).

Sample legal entity attributes

Select a role and a processing organization to which the attribute applies, then select an attribute type. You can also search the attributes using the Search field.

You can click next to the Attribute Type field to create a new attribute.

Enter the attribute value in the Value field, and click Save.

Note that if the Authorization mode is enabled, an authorized user must approve your entry.

 Ⓘ   [NOTE: If you want to specify a list of possible values for a given attribute, create the domain “leAttributeType.<attribute name>”, and add the values to that domain - The name is case sensitive]

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You can also select an attribute group to group the attributes for filtering purposes. Click next to the Attribute Group field to add attribute groups.

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You can set constraints on legal entity attributes using Configuration > Legal Data > Attribute Code (menu action refdata.LEAttributeCodeWindow).

Note however that these constraints are not enforced by Calypso. They can be enforced using custom validation routines. Refer to the Calypso Developer’s Guide for information on implementing custom validation routines.

Legal Entity Attribute Code window

Select an attribute and a type. You can click ... to create a new attribute.

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The Unique checkbox can be used to check that the attribute value is unique. The user would not be able to enter the same value for two legal entities.

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The Searchable checkbox can be used to search legal entities.

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The Mandatory checkbox can be used to make the attribute mandatory. The user would be prompted to enter a value upon saving a legal entity.

Then click Save.

 

Access Permissions

To set access permissions per legal entity attribute, set the comment of the attribute to "allowAccessPermission" in domain "leAttributeType".

Example:

Sample access permission on legal entity attribute

It creates the access functions AddModifyLEAttribute#ACCOUNTING and RemoveLEAttribute#ACCOUNTING. You can then grant read/write access or read-only access to these functions in Access Permissions.

It also creates the access function AuthorizeLEAttribute#ACCOUNTING.

 

5. Specifying Contact Information

Contacts represent departments or individuals within an organization. Contact information such as addresses, member ids, etc. is used for back office operations (generation of messages and payments).

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Load a legal entity then click Contact to associate contact personnel with the legal entity. At least one contact must be defined for message and payment generation.

You can also choose Configuration > Legal Data > Contact Personnel (menu action refdata.BOLEContactWindow). Help is available from that window.

 

6. Specifying Legal Agreements

Legal agreements provide default values for various types of trades.

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Load a legal entity then click Legal Agreement to specify legal agreements as applicable.

You can also set legal agreements using Configuration > Legal Data > Agreements (menu action refdata.BOLegalAgreementWindow). Help is available from that window.

 

7. Specifying Rating Information

Rating information is used for evaluating credit risk, and for reporting purposes.

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Load a legal entity then click Rating to set the legal entity rating.

You can also set rating information using Market Data > Credit Curves > Credit Ratings (menu action refdata.CreditRatingWindow).

Refer to the Calypso Credit Derivatives User Guide for details.

 

8. Specifying SDIs

SDIs (settlement and delivery instructions) are used for payment generation.

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Load a legal entity then click SDI’s to specify the SDIs associated with the legal entity.

You can also set SDIs using Configuration > Settlements > Settlement Instructions (menu action refdata.BOSettlDeliveryWindow). Help is available from that window.

 

9. Specifying Netting Methods

Netting methods allow associating a netting type with a counterparty / processing organization pair in order to perform automatic netting.

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Load a legal entity then click Netting Methods to specify the netting methods associated with the legal entity.

You can also set netting methods using Configuration > Settlements > Netting Method (menu action refdata.NettingMethodWindow).

Refer to the Calypso Settlements User Guide for details.

 

10. Specifying Custom Data

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Load a legal entity then click Custom to open a custom legal entity window for entering custom data.

Refer to the Calypso Developer’s Guide for information on implementing a custom legal entity window.

 

11. Specifying Registration Information

Registration information allows specifying registration details with a given settlement place or other external entities. It can be used for selection and reporting purposes.

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Load a legal entity then click Registration to specify registration information for the legal entity.

You can also specify registration details using Configuration > Legal Data > Registration Details (menu action refdata.BOLERegistrationWindow).

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Enter registration information as applicable and click Save to save your changes.

Note that if the Authorization mode is enabled, an authorized user must approve your entry.

 

12. Specifying Legal Entity Relations

You can specify relations to restrict the interaction between processing organizations and other legal entities for a given role. When you enter a trade, if no relation is defined between the processing org and the counterparty, you will not be able to save the trade.

You can also specify relations between two legal entities in the context of customer transfers, for a given PO or for all POs.

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Load a legal entity then click Relation to specify legal entity relations.

You can also specify relations using Configuration > Legal Data > Relation (menu action refdata.LERelationWindow).

Default legal entity relations

By default, all processing organizations can interact will all legal entities at the trade level.

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To restrict relations between POs and legal entities, select the default entry (ALL, ALL, ALL, NONE, ALL), and click Delete to delete it. Then set restrictions as applicable.

Select a processing org or ALL, click ... to select a legal entity, and select a role.

Then click Save.

Note that if the Authorization mode is enabled, an authorized user must approve your entry.

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To restrict relations between legal entities, select the default entry (ALL, ALL, ALL, ALL, ALL), and click Delete to delete it. Then set restrictions as applicable.

Select a processing org or ALL, and check "Multi Legal Entity".

Sample relation restriction

Click ... to select a legal entity, and select a role.

Then click ... to select another legal entity, and select a role.

Then click Save.

Note that if the Authorization mode is enabled, an authorized user must approve your entry.

 

 Ⓘ   [NOTE: You can disable the check for legal entity relations in the Legal Entity Selector by setting the access permission function DisableCheckLERelation]

 

Segregation of Legal Entity Roles by Processing Organization

Using legal entity relationships, you can segregate legal entity roles across the system by processing org.

This only applies if the environment property LEGAL_ENTITY_SEGREGATION = True.

In this case, roles are classified between “common” roles and “dedicated” roles. A “common” role can be viewed across all POs (like Issuer and MarketPlace), whereas a “dedicated” role can only be viewed for certain POs.

“Common” roles are defined in the domain “CommonLERole”. All other roles are considered “dedicated”.

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When a user creates a legal entity of “common” role, the system will create a legal entity relationship with specified role, and PO=ALL.

This requires the access permissions AddModifyLECommonRole and RemoveLECommonRole.

All users will be able to see this role for this legal entity.

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When a user creates a legal entity of “dedicated” role, the system will create a legal entity relationship with specified role for the POs to which the user is restricted.

This requires the access permissions AddModifyLEDedicatedRole and RemoveLEDedicatedRole.

Only users associated with this PO will be able to see this role for this legal entity.

 

In addition, when LEGAL_ENTITY_SEGREGATION = True, audit and authorization are segregated by processing organization.

For the objects not associated with a processing organization, you can add them to the domains "storePOForAudit" and "storePOForAuth".

For objects added to the domain "storePOForAudit", the processing organization is saved on the audit records.

For objects added to the domain "storePOForAuth", the processing organization is saved on the authorization records.

The processing organization saved on the records is the PO associated with the user if any. If the user is associated with multiple POs, then the parent PO is saved on the records if any.

 

13. Specifying Settlement Tolerance

Settlement tolerance is used when matching incoming payment messages with Calypso transfers. Additional setup is required in order to import incoming payment messages. Refer to the Calypso Cash Management User Guide for complete details.

 

14. Specifying Settlement Accounts

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Load a legal entity then click Account to define settlement accounts associated with the legal entity.

For example, you can specify settlement accounts associated with the processing organization.

You can also specify accounts using Configuration > Accounting > Accounts (menu action refdata.AccountFrame). Help is available from that window.

 

15. Specifying Reference Obligations

If a legal entity has the role Issuer, you can define the reference obligations to be used in Credit Derivatives trading.

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Load a legal entity then click Ref Obl to define the reference obligations associated with the legal entity.

Refer to the Calypso Credit Derivatives User Guide for details.

 

16. Displaying Pending Authorizations

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Click Show Auth to display any legal entity pending authorization. This only applies if the Authorization mode is enabled.

 

17. Utilities Menu

The menu items of the Utilities menu are described below.

Menu Items	Description
Search by Method	Allows you to search for a Legal Entity by an address method and its address code. For example, to find a legal entity by its SWIFT code, choose SWIFT and enter the code.
Search by Selector	Allows you to find a legal entity using various criteria, including legal entity attributes. The Legal Entity ID is then displayed on the Legal Entity Window.
Message Configuration	Opens the Message Rule window to display any message rule defined for this legal entity.
Update Market Data	Allows updating the market data associated with a legal entity in the case where you have changed the short name.
Update Static Data	Allows updating the various static data associated with a legal entity in the case where you have changed the short name.
CLS Setup Check	Checks if a legal entity is associated with a CLS agreement and if the corresponding SDIs are valid.
Close	Closes the window.

 

18. Setting EOD Dates and Times

You can set EOD dates and times per processing organization using Configuration > Legal Data > EOD (menu action refdata.LegalEntityEODTimeWindow).

Legal Entity EOD Time window

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Click ... to select a processing organization. Enter a date and enter an EOD time in hours and minutes.

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Then click Save.

 

When the system needs the EOD time, it uses the EOD time in the following order:

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The specific EOD time defined by book and date, if any.

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The specific EOD time defined by processing organization and date, if any.

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The default EOD time defined by book.

 

The Start of Day Time is set by the scheduled task ROLL_ACCENGINEDAY for processing organizations that have the legal entity attribute ACC_USE_BUSINESS set to Yes.

You can view start of day times using the CloseBusinessDay report (menu action reporting.ReportWindow$CloseBusinessDay).

Close Business Day report