-130- confidence level. Each of the table versions produced the maximum number within the chosen confidence level. The next series of versions of the VEP system were on line. The first version of the on-line system allowed traders to pull up information on their screens. Traders input details of trade, and the machine calculated the exposure numbers based upon the tables then in use. The resulting CEM amount was then added to the customer’s existing credit exposure. During 1993, traders could for purposes of discussions have used tables to calculate the CEM amount or they could have gone on line. For actual transactions, FNBC preferred that the traders and marketers use the on-line system. ii. Effect of the System FNBC’s VEP system allowed traders and marketers to do business without going to the credit department if a VEP credit limit had been established for that customer and if the new swap would not exceed that credit limit. It allowed FNBC to move away from each swap’s being individually approved by the credit department. The VEP system permitted the establishment of VEPLs, under which multiple VEP transactions with the same counterparty were permitted as long as the VEPL was not exceeded. A VEPL was required to be renewed at least annually. Once a VEPL was approved, traders and marketers could conduct transactions withPage: Previous 120 121 122 123 124 125 126 127 128 129 130 131 132 133 134 135 136 137 138 139 Next
Last modified: May 25, 2011