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, said DTCC in a release. 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 DTCC said 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, in the release. 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, according to the release.
DTCC’s charter members, Citi’s Smith Barney and GTS business units, are currently in full production; UBS is planning to implement Managed Account Services early next year, and other sponsors and investment managers will be announcing activation plans in the near future (see “FolioDynamix Joins DTCCs Managed Accounts Service’).