Managing account investment managers are about to get into Fund/SERV. This week the Depository Trust & Clearing Corporation revealed that its linking its managed account users to its flagship mutual fund services.

"DTCC's entry into the managed accounts business line allowed us to identify an opportunity to further streamline operations for both our managed accounts and mutual fund customers," stated DTCC wealth management services' Ana Bergin, managing director and general manager.

According to DTCC, charter member Citi (both Smith Barney and Global Transaction Services, which includes its outsourced fund arm) is "currently in full production", while UBS is lined up for 2009.

New York, NY, December 8, 2008 –The Depository Trust & Clearing Corporation (DTCC) announced today a change in its rules that will, for the first time, give investment managers who oversee managed accounts programs direct access to Fund/SERV® and other Mutual Fund Services. This rule change will simplify the process of managing mutual funds that are part of an investor’s managed account portfolio.

Until now, investment managers had to process fund orders through a third party, typically their company’s mutual fund unit or the sponsor broker/dealer. Information would then have to be communicated back to the investment manager, a process that has been complicated and prone to errors. By using Fund/SERV, which has helped the fund industry grow to its peak of $12 trillion, investment managers will now be able to automate, centralize and standardize purchases, exchanges and redemptions.

“DTCC’s entry into the managed accounts business line allowed us to identify an opportunity to further streamline operations for both our managed accounts and mutual fund customers,” said Ann Bergin, managing director and general manager, DTCC Wealth Management Services. “Streamlining fund processing for investment managers is an example of how we support the evolving needs of our customers and then look to leverage our infrastructure to increase efficiencies.”

To use Fund/SERV and other Mutual Fund Services, which are provided by DTCC’s National Securities Clearing Corporation (NSCC) subsidiary, investment managers will become limited members of NSCC (as Investment Manager/Agent Member). Money settlement for the transactions will be handled by a full member of NSCC, generally either the manager’s mutual fund unit or the sponsor broker/dealer.

Industry members comment on new membership
"DTCC has created a solution that will be particularly useful within the fixed-income managed accounts space. Pooled investment vehicles are the premier choice within the traditional fixed-income managed account portfolio as they offer increased ability to control diversification and risk management of the portfolio at lower managed account minimums. Connectivity will simplify the trading of these investments and increase efficiency for both investment managers and sponsors," said Anne Kruczek, senior vice president and head of Administration and Operations at Federated Investors, Inc. The firm, which has provided customized separate account management since 1973, manages $24.5 billion in fixed-income assets.

“Allowing the managed accounts industry access to the exceptional Mutual Fund Services that DTCC provides will improve back-office processing for our membership,” added Christopher Davis, president of The Money Management Institute. “Replacing transactional methods that are complicated, time-consuming and costly with a model that exemplifies DTCC’s unmatched expertise will ensure that managed investment solutions stay on pace as the fastest growing segment in the investment advisory industry.”

An outgrowth of DTCC’s Managed Accounts Service
Bergin explained that the new membership category is an outgrowth of the DTCC Managed Accounts Service, which provides a single gateway for the managed account industry to exchange information on account initiations, as well as ongoing customer profile updates and account maintenance. The Managed Accounts Service is supported by DTCC’s post-trade infrastructure, which offers an unparalleled level of security protection and data recovery compared to any other infrastructure organization in the world.

DTCC’s charter members, Citi’s Smith Barney and GTS business units, are currently in full production; UBS is planning to implement MAS early next year, and other sponsors and investment managers will be announcing activation plans in the near future.

About DTCC
DTCC, through its subsidiaries, provides clearance, settlement and information services for equities, corporate and municipal bonds, government and mortgage-backed securities, money market instruments and over-the-counter derivatives. Customers pay the lowest equities clearance fees in the world – an average of just 66 thousandths of a penny per 100 shares (or a third of a penny per transaction). In addition, DTCC is a leading processor of mutual funds and insurance transactions, linking funds and carriers with financial firms and third parties who market these products. DTCC's depository provides custody and asset servicing for 3.5 million securities issues from the United States and 110 other countries and territories, valued at $30 trillion. Last year, DTCC settled more than $1.86 quadrillion in securities transactions. DTCC has operating facilities in multiple locations in the United States and overseas.

About Wealth Management Services
Wealth Management Services is a business unit of DTCC that provides transactional and information services to the mutual fund, managed accounts and alternative investment products industries. Wealth Management Services automate, standardize and streamline the processing of transactions and data exchange between asset managers and their network of distribution partners. 

Edited by: Neil Anderson, Managing Editor


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