How To Fix THMHR_ADMIN457 - Derivative was assigned too high on hedge inception date

SAP Error Message - Details

• Message type: E = Error

• Message class: THMHR_ADMIN - Messages for managing hedge relationships

• Message number: 457

• Message text: Derivative was assigned too high on hedge inception date

What causes this issue?

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

System Response

How to fix this error?

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_ADMIN457 - Derivative was assigned too high on hedge inception date ?

  The SAP error message THMHR_ADMIN457 indicates that a derivative instrument has been assigned a hedge relationship that is considered too high on the hedge inception date. This typically occurs in the context of hedge accounting within SAP Treasury and Risk Management (TRM) module, where the system checks the effectiveness of the hedge at the inception date.
  Cause:
  
  Hedge Ineffectiveness: The hedge relationship may not meet the effectiveness criteria set by accounting standards (e.g., IFRS or US GAAP). This can happen if the fair value of the derivative is significantly higher than the underlying exposure it is hedging.
  Incorrect Valuation: The valuation of the derivative or the underlying exposure may be incorrect or not aligned with market conditions.
  Configuration Issues: There may be issues with the configuration of the hedge accounting settings in SAP, leading to incorrect assessments of the hedge relationship.
  Data Entry Errors: Incorrect data entry during the setup of the hedge relationship can lead to this error.
  
  Solution:
  
  Review Hedge Effectiveness: Check the effectiveness of the hedge relationship. Ensure that the derivative and the underlying exposure are appropriately matched in terms of amount, timing, and risk.
  Adjust Valuation: Verify the valuation of both the derivative and the underlying exposure. Make sure they reflect current market conditions and are correctly entered in the system.
  Configuration Check: Review the configuration settings for hedge accounting in SAP. Ensure that the parameters for hedge effectiveness testing are correctly set up.
  Correct Data Entry: If there are any data entry errors, correct them. This includes checking the amounts, dates, and other relevant details in the hedge relationship setup.
  Consult Documentation: Refer to SAP documentation or help resources for specific guidelines on hedge accounting and the requirements for hedge effectiveness.
  
  Related Information:
  
  Hedge Accounting Standards: Familiarize yourself with the relevant accounting standards (IFRS 9, ASC 815) that govern hedge accounting, as they provide guidelines on effectiveness testing and documentation.
  SAP Notes: Check for any SAP Notes related to this error message. SAP frequently releases updates and patches that may address specific issues or provide additional guidance.
  Training and Support: If the issue persists, consider reaching out to SAP support or consulting with a professional who specializes in SAP Treasury and Risk Management for further assistance.
  
  By following these steps, you should be able to identify the root cause of the error and implement the necessary corrections to resolve it.