Transcript Rule 22c-2 - Matrix | Broadridge

SEC Rule 22c-2
Matrix’ Support of
and
Planned Compliance with the Rule
OPTECH
SYSTEMS INC.
Matrix Settlement & Clearance Services, LLC is a wholly owned subsidiary of MG Colorado Holdings, Inc. Affiliates include: MSCS Financial Services, LLC (a subsidiary of
MSCS and a member of the NASD & SIPC); MG Trust Company, LLC; MG Advisory Services, LLC; and Optech Systems, Inc.
What Led to Rule 22c-2?



In March 2005 the SEC adopted Rule 22c-2 in an
effort to deal with market timing concerns.
The Rule specifically addresses the imposition and
treatment of redemption fees.
It requires that each mutual fund’s board must either


Approve a redemption fee, or
Determine that a redemption fee is either not necessary or
not appropriate.
OPTECH
S YS TE MS INC.
Matrix Settlement & Clearance Services, LLC is a wholly owned subsidiary of MG Colorado Holdings, Inc. Affiliates include: MSCS Financial Services, LLC (a subsidiary of
MSCS and a member of the NASD & SIPC); MG Trust Company, LLC; MG Advisory Services, LLC; and Optech Systems, Inc.
Rule 22c-2: Requirements


Regardless of whether a fund imposes a redemption fee, the
fund will be required to enter into a written agreement with
each “Financial Intermediary”.
The agreement must include language whereby the Financial
Intermediary agrees to:



Provide the Tax Identification Number of the shareholder upon request
from the fund along with the amounts and dates of the shareholder’s
transaction(s).
Execute any instructions from the fund to restrict or further prohibit the
shareholder’s activity that violates the polices of the fund.
The Rule is scheduled to go into effect October 16, 2006.
OPTECH
S YS TE MS INC.
Matrix Settlement & Clearance Services, LLC is a wholly owned subsidiary of MG Colorado Holdings, Inc. Affiliates include: MSCS Financial Services, LLC (a subsidiary of
MSCS and a member of the NASD & SIPC); MG Trust Company, LLC; MG Advisory Services, LLC; and Optech Systems, Inc.
Rule 22c-2: Points of Concern

Fund Agreements


The Rule did not address the “Chain of Intermediary
Situations” whereby Matrix was not identified as a type of
intermediary.
Without a change to the definition of a Financial
Intermediary, Matrix’ customers would be forced to execute
new shareholder information agreements with each mutual
fund they do business with.
OPTECH
S YS TE MS INC.
Matrix Settlement & Clearance Services, LLC is a wholly owned subsidiary of MG Colorado Holdings, Inc. Affiliates include: MSCS Financial Services, LLC (a subsidiary of
MSCS and a member of the NASD & SIPC); MG Trust Company, LLC; MG Advisory Services, LLC; and Optech Systems, Inc.
Rule 22c-2: Matrix Responds


Matrix has been in communication with the ICI and
took the lead in a campaign to change the definition
of a Financial Intermediary.
It is expected that the SEC will give mutual funds the
discretion to allow Matrix to sign these agreements in
its role as trading agent for the Financial Intermediary
as that term is defined in the rule.
OPTECH
S YS TE MS INC.
Matrix Settlement & Clearance Services, LLC is a wholly owned subsidiary of MG Colorado Holdings, Inc. Affiliates include: MSCS Financial Services, LLC (a subsidiary of
MSCS and a member of the NASD & SIPC); MG Trust Company, LLC; MG Advisory Services, LLC; and Optech Systems, Inc.
Rule 22c-2: Data Reporting
Requirements





All requests for information by the mutual funds will be
received by Matrix for accounts where we are listed as trading
agent.
Matrix will notify each client when a request for underlying
account information is received.
The data for the funds is housed in Matrix’ clients’ trust
accounting and/or recordkeeping systems.
Clients’ system vendors should begin making the necessary
enhancements to allow this data to be transmitted to Matrix.
Matrix will provide electronic delivery of this data to the funds
via the NSCC.
OPTECH
S YS TE MS INC.
Matrix Settlement & Clearance Services, LLC is a wholly owned subsidiary of MG Colorado Holdings, Inc. Affiliates include: MSCS Financial Services, LLC (a subsidiary of
MSCS and a member of the NASD & SIPC); MG Trust Company, LLC; MG Advisory Services, LLC; and Optech Systems, Inc.
Next Steps


Occasional updates will be provided through
future web cast presentations on our website.
Our annual client conference (August 13-16)
will feature a panel discussion of Rule 22c-2
including industry experts.
OPTECH
S YS TE MS INC.
Matrix Settlement & Clearance Services, LLC is a wholly owned subsidiary of MG Colorado Holdings, Inc. Affiliates include: MSCS Financial Services, LLC (a subsidiary of
MSCS and a member of the NASD & SIPC); MG Trust Company, LLC; MG Advisory Services, LLC; and Optech Systems, Inc.