How To Fix TPM_THX1421 - Upper limit of effectiveness ratio exceeds specified limit (140)

TPM_THX1421 - Overview

• Message type: E = Error

• Message class: TPM_THX1 - Treasury: Message Class for P-HA

• Message number: 421

• Message text: Upper limit of effectiveness ratio exceeds specified limit (140)

Self-Explanatory Message

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Smart SAP Assistant

• What is the cause and solution for SAP error message TPM_THX1421 - Upper limit of effectiveness ratio exceeds specified limit (140) ?

  The SAP error message TPM_THX1421, which states "Upper limit of effectiveness ratio exceeds specified limit (140)," typically occurs in the context of Treasury and Risk Management, particularly when dealing with hedging transactions or financial instruments.
  
  Cause:
  This error indicates that the effectiveness ratio of a hedging relationship exceeds the maximum allowable limit set in the system. The effectiveness ratio is a measure of how well a hedging instrument offsets the risk of the underlying exposure. In this case, the upper limit is set to 140%, meaning that the hedging instrument is deemed too effective, which can lead to accounting and reporting issues.
  
  Solution:
  To resolve this error, you can take the following steps:
  
  
  Review the Hedging Relationship: Check the details of the hedging relationship to ensure that the effectiveness ratio is calculated correctly. This may involve reviewing the underlying exposure and the hedging instrument.
  
  
  Adjust the Hedging Strategy: If the effectiveness ratio is indeed too high,