Transcript Document
5939-1 Mutual Fund Services National Securities Clearing Corporation Mutual Fund Services A Presentation for Bank Depository User Group Mutual Funds Update October 25, 2005 5939-2 6049-2 Denise Grant Director Distribution Services National Securities Clearing Corporation is a subsidiary of The Depository Trust & Clearing Corporation Mutual Fund Services Today’s Agenda • Enhancements Overview • 2005 Enhancements • 2006 Potential Enhancements • New Initiatives 6049-3 • Statistics Enhancements Overview Mutual Fund Services Enhancements • NSCC works with various industry groups and special task forces to discuss the need for enhancements • Investment Company Institute (ICI) • Broker Dealer Advisory Committee (BDAC) • Bank and Trust Advisory Committee (BTAC) • Transfer Agent Advisory Committee (TAAC) 6049-4 • International Operations Advisory Committee (IOAC) Enhancements Overview Mutual Fund Services Enhancements • NSCC works with various industry groups and special task forces to discuss the need for enhancements • National Association of Securities Dealers (NASD) • Joint NASD/Industry Task Force on Breakpoints • Securities Industry Association (SIA) 6049-5 • SIA Operations Committee Mutual Fund Services 6049-6 2005 Enhancements 2005 Enhancements March Release • Direct Accounts Through Networking • Important Notice A#5948 6049-7 • Enhancements to Mutual Fund Profile Service II (MFPSII) for PCWeb Direct 2005 Enhancements May Release • Enhancements to Mutual Fund Profile Service II (MFPSII) for PCWeb Direct 6049-8 • Important Notice A#6005 2005 Enhancements August Release • Enhancements To Mutual Fund Profile Service II (MFPSII) for PCWeb Direct and Mainframe 6049-9 • Important Notice A#6062 2005 Enhancements September Release • Short-Term Redemption Fees • Important Notice A#6035, A#6056, A#6064, A#6080 • New sequential record Fund/SERV records • Allows for collection of short-term redemption fees at time of trade 6049-10 • Networking Activity file modified 2005 Enhancements September Release • Mutual Fund Profile Service – Daily Price & Rate • Important Notice A#6051 • Fund/SERV reject Codes 6049-11 • Important Notice A#6035 and A#6056 2005 Enhancements November Release • Enhancements to Mutual Fund Profile Service II (MFPSII) For Mainframe and PCWeb Direct • Important Notice A#6084 6049-12 • Enhancements to Mutual Fund Profile Service II (MFPSII) For Mainframe and PCWeb Direct 2005 Enhancements December Release • Additional Social Security & Tax Identification Numbers • Important Notice A#6076 • Modifications To Social Codes On Mutual Fund Services • Important Notice A#6082 • Mutual Fund Commission Settlement Service Enhancements 6049-13 • Important Notice A#6092 2005 Enhancements December Release • New Codes for Defined Contribution Clearance & Settlement (DCC&S) on Fund/SERV • Important Notice A#6081 • IRA/DCP/529 Indicator renamed Asset Type Indicator 6049-14 • Ten new codes added 2005 Enhancements December Release • New Codes for Defined Contribution Clearance & Settlement (DCC&S) on Fund/SERV • Settlement Override Reason Code Field • 07 = Refer to Asset Type Indicator • NAV Reason Code Field 6049-15 • C = Refer to Asset Type Indicator 2005 Enhancements December Release • New Codes for Defined Contribution Clearance & Settlement (DCC&S) on Fund/SERV • TPA Number Field • Allowed only if Asset Type Indicator = B, FO 6049-16 • Short Registration Exception Mutual Fund Services 6049-17 2006 Enhancements Potential 2006 Releases • Networking SCRUB (Full & Partial) and Fund Acknowledgement Modifications • Reconcile static data discrepancies for client accounts • Fund and firms should reflect identical account information • Assist in resolving breaks of non-financial information 6049-18 • Identify breaks as they occur Potential 2006 Releases • Breakpoint Task Force – Client Data Share items • Allows a firm to provide customer related information in a standardized format on an account set-up 6049-19 • “Reverse” Position files for Omnibus accounts Potential 2006 Releases • Omnibus Task force Recommendations • Share Aging file modifications • CDSC file name changed to Share Aging • Broadens use of information on the file to include Short-Term Redemption Fee, Costbasis, 12b-1 and other calculations based on holding period 6049-20 • Five new fields and indicators will be added Potential 2006 Releases • Mutual Fund Profile Service II (MFPSII) Task Force • Subcommittee of the Investment Company Institute (ICI) Broker/Dealer Advisory Committee (BDAC) 6049-21 • Continued modifications of MFPSII to create consistency and clarify ambiguity of fields Potential 2006 Releases • Tax Law – American Job Act Changes • Provide fields needed to accurately report the portion of the fund’s distribution subject to: American Jobs Creation Act of 2004 (AJCA) and Foreign Investment in Real Property Tax Act of 1980 (FIRPTA) 6049-22 • Non-resident alien shareholders are subjected to the new tax laws with QII, short-term capital gains and withholding amounts affected Potential 2006 Releases • Tax Law – American Job Act Changes • Information needs to be passed from fund to firm at time of distribution/declaration • An automated process to allow firms to know the portion of the distribution that is attributable to gains as a result of U.S. real property interests • Proposed system changes • Networking Dividends 6049-23 • Profile Distribution Potential 2006 Releases • Standard Data Reporting • SEC Rule 22c-2 • Standard, automated facility for funds to request and retrieve shareholder trading information from intermediaries • SEC Compliance date October 16, 2006 6049-24 • NSCC Pilot date 3Q 2006 Mutual Fund Services 6049-25 New Initiatives Alternative Investment Products • Automate and standardize information for: • Hedge Funds • Fund of Hedge Funds • Managed Futures • Commodity Pools • REITs • Advisory committee of more than 30 firms, funds, and service providers 6049-26 • Centralized USD settlement Alternative Investment Products Pilot launch (target June 2006) to include: • Subscriptions • Redemptions • Tender Offers • Account Maintenance • Commission Settlement • Account Maintenance • Valuation Reporting 6049-27 • Position Reporting • Distribution Reporting Separately Managed Accounts • Support SMA industry defined information message and processing standards • Sponsors • Investment Managers • Custodians • Provide a single conduit for data and message flows • Directly or via service provider • Utilize existing connectivity into DTCC • Provide central Infrastructure 6049-28 • Insure integrity standards • Development • Operations Separately Managed Accounts • Progress to date • Data Standards Committee • MMI Standards Version 1.1 complete • Version 2 in progress • Prototype HUB • Standard Message Flow • XML Schemas • Data repository and processing system 6049-29 • DTCC Advisory Group being established Mutual Fund Services 6049-30 Statistics Fund/SERV Statistics Lower Costs as Volume Increases 450,000 412,000 400,000 341,434 1,200 350,000 1,000 $0.50 442 $0.50 250,000 800 437 $0.40 200,000 600 $0.35 150,000 666 $0.30 652 $0.25 100,000 $0.175 50,000 - 200 Funds Firms 20 04 20 03 20 02 20 01 20 00 19 99 19 98 19 97 19 96 19 95 19 94 19 93 19 92 19 91 19 90 19 89 19 88 19 87 19 86 - Volume 6049-31 400 Participants Average Daily Volume 300,000 Networking Statistics 1988 6049-32 Sub-Accounts 67,077 Users 15 2004 65,045,679 979 Resources • Your Relationship Manager • Mutual Fund Marketing 212-855-8877 • http://funds.dtcc.com • Important Notices • Manuals • User Guides 6049-33 • Record Layouts Mutual Fund Services 6049-34 Questions?