How To Fix THMHR_ADMIN530 - Derivative &1 &2 is assigned too high at start of hedging relationship

SAP Error Message - Details

• Message type: E = Error

• Message class: THMHR_ADMIN - Messages for managing hedge relationships

• Message number: 530

• Message text: Derivative &1 &2 is assigned too high at start of hedging relationship

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_ADMIN530 - Derivative &1 &2 is assigned too high at start of hedging relationship ?

  The SAP error message THMHR_ADMIN530 indicates that a derivative instrument is assigned to a hedging relationship but is considered "too high" at the start of that relationship. This typically means that the fair value or the notional amount of the derivative exceeds the limits set for the hedging relationship, which can lead to compliance issues with accounting standards.
  Cause:
  
  Valuation Issues: The derivative's fair value at the start of the hedging relationship may be higher than expected, possibly due to market fluctuations or incorrect valuation inputs.
  Notional Amount: The notional amount of the derivative may exceed the hedged item, which is not permissible under hedge accounting rules.
  Hedge Effectiveness: The derivative may not meet the effectiveness criteria required for hedge accounting, leading to this error.
  Configuration Issues: There may be incorrect settings in the hedging relationship configuration or in the valuation of the derivative.
  
  Solution:
  
  Review Valuation: Check the fair value of the derivative at the start date of the hedging relationship. Ensure that it is calculated correctly and reflects the market conditions.
  Adjust Notional Amount: Ensure that the notional amount of the derivative is appropriate and does not exceed the hedged item. Adjust the notional amount if necessary.
  Check Hedge Effectiveness: Evaluate the effectiveness of the hedge. Ensure that the relationship meets the criteria for hedge accounting as per the relevant accounting standards (e.g., IFRS 9 or ASC 815).
  Configuration Review: Review the configuration settings for the hedging relationship in SAP. Ensure that all parameters are set correctly and in accordance with your organization's hedging policy.
  Consult Documentation: Refer to SAP documentation or help resources for specific guidance on the error message and related configuration settings.
  
  Related Information:
  
  Hedge Accounting Standards: Familiarize yourself with the relevant accounting standards that govern hedge accounting, such as IFRS 9 or ASC 815, to ensure compliance.
  SAP Notes: Check for any SAP Notes related to this error message for patches or updates that may address known issues.
  Testing: After making adjustments, test the hedging relationship again to ensure that the error is resolved and that the relationship is effective.
  
  If the issue persists after following these steps, it may be beneficial to consult with your SAP support team or a financial expert familiar with SAP Treasury and Risk Management.