How To Fix THMHR_ADMIN025 - Commodity swap cannot be used as hedging instrument

SAP Error Message - Details

• Message type: E = Error

• Message class: THMHR_ADMIN - Messages for managing hedge relationships

• Message number: 025

• Message text: Commodity swap cannot be used as hedging instrument

What causes this issue?

You have selected a commodity swap with multiple flows as a hedging
instrument.
Currently, we do not support such commodity swaps because we do not
support corresponding exposures.

System Response

The system issues an error message and will not allow you to continue with this transaction until the error is resolved.

How to fix this error?

Use commodity swaps with a single exchange date.

Procedure for System Administrators

Error message extract from SAP system. Copyright SAP SE.

Smart SAP Assistant

• What is the cause and solution for SAP error message THMHR_ADMIN025 - Commodity swap cannot be used as hedging instrument ?

  The SAP error message THMHR_ADMIN025 indicates that a commodity swap cannot be used as a hedging instrument. This error typically arises in the context of financial transactions involving hedging instruments in SAP Treasury and Risk Management (TRM).
  Cause:
  The error can occur due to several reasons, including:
  
  Incorrect Configuration: The commodity swap may not be properly configured in the system to be recognized as a valid hedging instrument.
  Hedging Relationship Issues: The hedging relationship may not be correctly defined or may not meet the criteria set by the accounting standards (e.g., IFRS or GAAP).
  Market Data Issues: There may be missing or incorrect market data that is required for the valuation of the commodity swap.
  Incompatibility: The commodity swap may not be compatible with the underlying exposure or the hedging strategy being applied.
  Regulatory Compliance: The swap may not comply with the regulatory requirements for hedging instruments.
  
  Solution:
  To resolve the error, consider the following steps:
  
  
  Check Configuration:
  
  Ensure that the commodity swap is correctly configured in the system. This includes checking the settings in the transaction types and the relevant master data.
  Verify that the commodity swap is marked as a hedging instrument in the system.
  
  
  
  Review Hedging Relationships:
  
  Check the hedging relationship settings to ensure they are correctly defined. This includes verifying the underlying exposure and ensuring that the swap is linked to the correct exposure.
  
  
  
  Validate Market Data:
  
  Ensure that all necessary market data is available and correctly maintained in the system. This includes checking for any missing or outdated data that could affect the valuation of the swap.
  
  
  
  Consult Documentation:
  
  Review SAP documentation or help resources related to Treasury and Risk Management to ensure compliance with the necessary accounting standards and regulations.
  
  
  
  Test with Different Scenarios:
  
  If possible, test the commodity swap with different scenarios to identify if the issue is specific to certain conditions or configurations.
  
  
  
  Seek Expert Assistance:
  
  If the issue persists, consider reaching out to your SAP support team or a consultant with expertise in SAP Treasury and Risk Management for further assistance.
  
  
  
  Related Information:
  
  SAP Notes: Check for any relevant SAP Notes that may address this specific error or provide additional guidance.
  Transaction Codes: Familiarize yourself with relevant transaction codes in SAP TRM, such as those for managing hedging relationships, market data, and financial instruments.
  Training and Documentation: Consider training sessions or documentation on SAP TRM to better understand the configuration and management of hedging instruments.
  
  By following these steps, you should be able to identify the root cause of the error and implement the necessary solutions to resolve it.