© dtcc mutual fund services: sharing our solution cecilia humphrey americas representative...
TRANSCRIPT
© DTCC
25 Years’ Collaboration with the Funds Industry
• Supporting the Mutual Fund industry’s explosive growth since the early 1980’s
• Introduced automation, replacing the paper-intensive processes that were impeding industry expansion and causing serious risk
• Evolved communication from fax, phone and “snail mail” to internet and other communication networks
• Developed an industry-led product – working groups (Firms and Funds) created an industry standard
• Now in its 25th year supporting the Mutual Fund industry
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© DTCC
Recently Renamed: Wealth Management Services
• Our sole focus as a neutral processing hub is to serve the needs of customers and safeguard the integrity of the financial markets
• Connecting a vast network of fund companies, transfer agents, broker/dealers, banks, trusts and other financial services firms that offer mutual fund investments to the market, including 300+ dealers to 45,000 funds: 40,000 US funds + 5,000 are European UCITS.
• We work in partnership with the industry to develop cutting edge solutions in automated, standardized, centralized services via a single interface to market participants. 3
Continuing catalyst for dramatic expansion of the business relationships that exist in the mutual fund world
© DTCC
Fund/SERV
Replaced the past fax-intensive, ad hoc steps, expensive…..
…withDTCC Fund/SERV: standard, comprehensive,automated, safe, low-cost
Firm
“A”
Firm
“B”
Firm
“C”
Firm
“D”
Fund
“A”
Fund
“A”
Fund
“B”
Fund
“B”
Fund
“C”
Fund
“C”
Fund
“D”
Fund
“D”
Firm
“A”
Firm
“B”
Firm
“C”
Firm
“D”
Fund
“A”
Fund
“B”
Fund
“C”
Fund
“D”
DTCC
Fund/SERV
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© DTCC
Fund/SERV 2011
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Price
U.S. Mutual Fund Industry Total Net Assets (Trillions of dollars)
Daily Average Transaction Volume
737 Fund Families:
327 Firms
40,000 US Funds 5,000 UCITS Funds
Note: Fund/SERV® is a registered trademark.
© DTCC
DCV’s Settlement Bankfor NSCC/DTC
In USA
DTCC’s Settlement Bank in UK
DCV Participant A
DCV Settlement
Bank
Planned for 2011
DCV Participant B
DCV Participant C
US Funds
Offshore Funds(European)
DCV – DTCC Partnership
DTCCDTCCSettlementSettlement
DTCC Fund/SERV
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© DTCC
DCV -DTCC Mutual Fund Services
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© DTCC
Core Mutual Fund Services
1. Fund/SERV
2. Networking
3. Commission Settlement
4. Mutual Fund Profile
Service
• An industry standard for automating and streamlining all aspects of mutual fund processing via a centralized infrastructure
• Increased operational efficiency resulting in risk reduction
• Cost per Fund/SERV transaction in 2011= USD 0.06.
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© DTCC
Registration
Mutual Fund
Order Order
Confirmation
Correction Correction
Confirmation
Settlement Detail Settlement Detail
Settlement Summary
Settlement Summary
Registration
Fund/SERV®
Registration Acknowledgement
Registration Acknowledgement
Fund/SERV Orders
Input, confirmation, settlement, registration
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© DTCC
Fund/SERV’s Service in US
US Brokers’ and Banks’ Settlement Banks
for NSCC/DTC In USA
DTCCDTCCSettlementSettlement
DTCC’s UK/Euro
Settlement Bank
DTCC Fund/SERV
US Brokers’ and Banks’
UK/EuroSettlement
Banks
Pending regulatory approval: UK and Euro Settlement
Brokers and Banks
40,000 US Funds
5,000 Offshore Funds e.g., Luxembourg, Dublin
Fund/SERV Service Flow
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© DTCC
Networking
• Extends the power of Fund/SERV from transaction processing to asset servicing. Allows mutual funds and brokers to exchange all other account information including:
– Account Position Information
– Dividend Processing
– Account Maintenance Reconciliation
– Transfers
– Year-end Reporting
– Activity Reporting
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(updates, balances client records between broker and fund)
© DTCC
Networking
• Benefits both firms and funds• Single connection for information exchange• Standardized information• Eliminates duplicate systems
Information flow from Funds
Year-End Processing
Mutual Fund
Activity Activity
Dividends
Settlement Settlement
Dividends
AccountMaintenance
Positions Positions
Year-EndProcessing
Networking AccountMaintenance
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© DTCC
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Commission Settlement
A centralized hub for processing and paying/receiving commission payments
• Multiple types of mutual fund commissions
• Simplified, automated reconciliation
• Centralized money settlement into a single daily settlement figure
• Payment flexibility (daily, weekly, monthly)
© DTCC
Commission Settlement
Commission Settlement
Commission Detail Commission Detail
Commission Summary
Commission Summary
Settlement Settlement
Mutual Fund
Commission Settlement
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(Sometimes Known as Rebate Settlement)
© DTCC
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Commission SettlementThe Standard Process
• Commission Settlement (Monday – Saturday) from 12 a.m. to 2 p.m. Fund companies electronically transmit commission data for processing and forwarding to firms
• Distributors receive automated and standardized files containing detail and summary commission data
• At 3 p.m. the day before settlement, NSCC notifies both fund companies and distributors of their commission settlement obligations
Commission settlement obligations are nettedwith other Mutual Fund Services
© DTCC
Mutual Fund Profile Security Database
• Approximately 140 Fund Companies have populated Mutual Fund Profile• Over 21,000 CUSIPs are available• Over 250 Data Points for each CUSIP is available to Firms. Data includes
information such as:• Breakpoints• Linkage Rules• Characteristics and Investment Objectives• Share-class Definitions • Minimum and Maximum Restrictions on Purchases and
Redemptions• Additional data elements have been identified by Fund and Firms.• Expansion of Profile to support Retirement business needs (401k market)• Comparison Tool
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© DTCC
DCV Membership and Sponsorship
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DCV
NSCC Member/ #2735
Individual NSCC Accounts under
DCV’s sponsorship
DCV Participant
A
DCV first became an NSCC Member – Participant # 2735.
DCV is working with a pilot group of Chilean firms seeking to trade UCIT funds via Fund/SERV.
NSCC will assign DCV individual account numbers for each member using the service, in the members’ names.
DCV Participant
B
© DTCC
U.S. Funds,European
Funds (UCITS)
• DCV Participant will submit orders using ‘PC Web Direct’ and will see only its own reports and activities including settlement information, and DCV can monitor and support.
• Funds confirm orders back. DCV’s sponsored members will access these confirms via PCWeb Direct HTML report facility.
• DCV will settle the cash obligations with NSCC across all its sponsored members’ accounts. To DCV, this will be a net
settlement with NSCC.
Fund/SERV
DCV Participant
A
DCV NSCC Acc
Confirms
Settlement file info
Settlement file info
Confirms
Settlement obligation
Net Settlement- Obligation
DCV’s Fund/SERV Process Flow
DCV Participant
B
Orders Orders
ConfirmsOrders
© DTCC
DCV Fund/SERV Money Settlement Flow
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Net
© DTCC
Another Model: Third Party Provider (TPP)
Member’s Settlement Bank
Member #1 NSCCFund/SERVTPP
(e.g., Market Infrastructure / CSD as TPP)
NSCC Member
Member #2
Member#3
• The TPP will act as a routing platform that will link the TPP’s customers to Fund/SERV. This will allow the TPP’s customers to gain automated access to US and offshore funds eligible for Fund/SERV.
• The TPP sub-contracts with another NSCC participant to take settlement responsibility.
DTCCDTCCSettlementSettlement
DTCC Fund/SERV
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© DTCC
Questions
• Does your organization provide services to Mutual Funds?
• Are there any current Mutual Fund Services initiatives in your market?
• Locally? Off-shore?
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