A Securities and Exchange Commission (SEC) rule filing submitted by DTCC’s clearing subsidiary paves the way for broker/dealers to leverage DTCC’s Insurance Services platform to automate processing and support the administrative handling of these wrap-like non-insurance retirement and other benefit programs, according to a news release.
These wrap-like programs are similar to annuities in that they allow for retirement investing based on the bundling of multiple investment options – typically mutual funds. The programs are considered non-insurance because the programs are not themselves insurance products nor are they governed by state insurance regulations, the company said.
The rule filing, which became effective December 13, 2006, allows broker/dealers to offer their own retirement programs to plan sponsors through distributing intermediaries. These broker/dealers can now qualify as direct NSCC insurance carrier/retirement services members; previously only insurance carriers could qualify for this type of membership.
The company said the rule filing also expands the types of products Insurance Services can process to include non-insurance retirement and other benefit plan products. Until now, Insurance Services has provided services for the annuity and life insurance markets, the announcement said.
“With 78 million baby boomers entering retirement in the next few years, there will be a huge transition from the accumulation stage to the distribution and payout stage, which opens the door for a wide range of new retirement products,’ said John Ziambras, DTCC Managing Director, Insurance Services, in the announcement.
Broker/dealers and other entities offering these programs will be able to leverage a number of key Insurance Services’ reporting solutions, including:
- Commissions, which automates compensation payments and provides same-day money settlement to broker/dealers, banks, and other distributors;
- Positions, which gives broker/dealers, carriers, and, indirectly, their customers access to detailed information about their investment programs, including current asset values; and
- Financial Activity Reporting, which allows distributors to track daily investment activity and meet compliance requirements related to monitoring for market timing, late-day trading, and money laundering.
More information about the company is at www.dtcc.com.