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Bank ACATS
BDUG Annual MeetingOctober 24,2005Scottsdale, AR
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Bank ACATS Program
•Topics:
•History of Program
•Primary Differences
•Benefits of Participation
•Current Bank/Stats
•Current Initiatives
•Questions
•Topics:
•History of Program
•Primary Differences
•Benefits of Participation
•Current Bank/Stats
•Current Initiatives
•Questions
4
History of Program
•Pilot for Banks 1999
•Originally 7 Banks Participating
•Good Faith Effort – Participation Not Mandated
•Most Brokerage Firms Participated in Pilot
•DTCC Opened Program to all Banks June 1999
•Pilot for Banks 1999
•Originally 7 Banks Participating
•Good Faith Effort – Participation Not Mandated
•Most Brokerage Firms Participated in Pilot
•DTCC Opened Program to all Banks June 1999
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Primary Differences
•Good Faith Effort – Not Mandated
•Paperwork Required
•Assets Move Free of Payment
•No Valued Fails
•Good Faith Effort – Not Mandated
•Paperwork Required
•Assets Move Free of Payment
•No Valued Fails
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Benefits
•Customer Satisfaction Reduced Timeframe to Transfer
Account Initial Experience a Positive One
•Competitive Advantage
•Cost Reduction Follow up Process Pending & Reversal of Transactions
•Ability to Trade and Collect Fees Sooner
•Customer Satisfaction Reduced Timeframe to Transfer
Account Initial Experience a Positive One
•Competitive Advantage
•Cost Reduction Follow up Process Pending & Reversal of Transactions
•Ability to Trade and Collect Fees Sooner
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Benefits
•Electronic Notification of Assets and Cash
•Standardization/Automation
•Ability to Accelerate Process
•Residual Balances Processing
•Contacts within Financial Community
•Electronic Notification of Assets and Cash
•Standardization/Automation
•Ability to Accelerate Process
•Residual Balances Processing
•Contacts within Financial Community
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Current Users
•Bank of America
•Bank One Trust Co.
•Bank of NY
•Citigroup PVT Bank
•City Nat’l Bank
•Comerica
•Country Trust Bank
• First American Trust
• Fleet Bank
• FNB Omaha
•Glenmede Trust Co.
•Bank of America
•Bank One Trust Co.
•Bank of NY
•Citigroup PVT Bank
•City Nat’l Bank
•Comerica
•Country Trust Bank
• First American Trust
• Fleet Bank
• FNB Omaha
•Glenmede Trust Co.
•Huntington Nat’l
• IBT
•Key Bank
•Mellon Bank
•Nat’l City Bank
•Reliance Trust
• SEI Trust Co.
• State Street Bank
• SunTrust Bank
•UMB
•Union Bank of Cal
•Wachovia
•Huntington Nat’l
• IBT
•Key Bank
•Mellon Bank
•Nat’l City Bank
•Reliance Trust
• SEI Trust Co.
• State Street Bank
• SunTrust Bank
•UMB
•Union Bank of Cal
•Wachovia
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Volumes (Transactions)
Year
TIFS Assets Settled %IncreaseSettled
2001
4,800 7,200 58,800
-
2002
6,900 16,800
90,000
53%
2003
9,600 28,800
114,000
27%
2004
14,400 36,000
138,000
21%
2005
15,000 54,000
156,000
8%
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ACATS Process Overview
ACATS
IPS/Annuities
Stocks & Bonds
Cost Basis Information
Mutual Funds
6-7 Day Cycle
Snap Shot of Assets currently held in the
Account
Mutual Fund Companies
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Current Initiatives
•Trust System Automation
•Discussions with Regulatory Agencies
•Cost Basis / IPS
•Mutual Funds as Participants
•Trust System Automation
•Discussions with Regulatory Agencies
•Cost Basis / IPS
•Mutual Funds as Participants
Cost Basis Reporting Service
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Cost Basis Reporting Service
•Topics:
•General Description of CBRS - What is it?
•Benefits of CBRS
•Current CBRS Users / Volume
•CBRS Fees
•Topics:
•General Description of CBRS - What is it?
•Benefits of CBRS
•Current CBRS Users / Volume
•CBRS Fees
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What is CBRS?
• The Cost Basis Service (CBRS is an automated system that provides brokerage firms, banks and other financial organizations the ability to transfer cost basis information from one firm to another on any asset transfer through ACATS
• Passes Asset and Tax Lot information for customer to calculate tax liability (gain & loss)
• Available for a wide range of assets
• The Cost Basis Service (CBRS is an automated system that provides brokerage firms, banks and other financial organizations the ability to transfer cost basis information from one firm to another on any asset transfer through ACATS
• Passes Asset and Tax Lot information for customer to calculate tax liability (gain & loss)
• Available for a wide range of assets
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Benefits of CBRS
•Expands firm’s customer service
•Automates the transfer of Cost Basis data
•Centralizes and standardizes the information transfer
•Eliminates the manual re-entry and/or recalculation of Cost Basis portfolio information
•Significantly reduces cost associated with obtaining and maintaining Cost Basis data
•Expands firm’s customer service
•Automates the transfer of Cost Basis data
•Centralizes and standardizes the information transfer
•Eliminates the manual re-entry and/or recalculation of Cost Basis portfolio information
•Significantly reduces cost associated with obtaining and maintaining Cost Basis data
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Current CBRS Users
•Currently 27 firms using CBRS
MerrillLynch LinscoPrivateLedger
Citigroup JanneyMontgomeryScott
UBSFinancial Pershing
PiperJaffray HSBCSecurities
StifelNicolaus RobertBaird
FirstClearing Davenport
WellsFargoInvestments HuntleighSecurities
Ferris,BakerWatts Sterne,Agee&Leach
NationalInvestors HilliardLyons
WedbushMorgan MorganStanleyDW
LegentClearing BearStearns
Scott&Stringfellow RaymondJames
H&RBlock MorganKeegan
NationalFinancial
•Currently 27 firms using CBRS
MerrillLynch LinscoPrivateLedger
Citigroup JanneyMontgomeryScott
UBSFinancial Pershing
PiperJaffray HSBCSecurities
StifelNicolaus RobertBaird
FirstClearing Davenport
WellsFargoInvestments HuntleighSecurities
Ferris,BakerWatts Sterne,Agee&Leach
NationalInvestors HilliardLyons
WedbushMorgan MorganStanleyDW
LegentClearing BearStearns
Scott&Stringfellow RaymondJames
H&RBlock MorganKeegan
NationalFinancial
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Current CBRS Volume
• Approximately 175,000 CBRS records processed on a daily basis
• Approximately 35,000 assets and 140,000 tax lot records
• Average 4.0 tax lots per asset
• Approximately 175,000 CBRS records processed on a daily basis
• Approximately 35,000 assets and 140,000 tax lot records
• Average 4.0 tax lots per asset
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CBRS FEES
•9 cents per asset record received (Receiver firm only)
•Can have unlimited amount of associated Tax Lots per asset
•9 cents per asset record received (Receiver firm only)
•Can have unlimited amount of associated Tax Lots per asset
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CBRS Via PC Web
•Screen Input capability available
•Expanded file upload capability for CBRS
•Important Notice A#5999 dated March 14, 2005
•Screen Input capability available
•Expanded file upload capability for CBRS
•Important Notice A#5999 dated March 14, 2005
ACATS/IPS Overview
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What is ACATS/IPS?
• A link between the ACATS system and the IPS system to allow insurance assets to be included in a ACATS transaction.
• IPS will be the link to the Insurance Carriers, as FundServ acts as the link for mutual fund assets in ACATS/FundServ.
• ACATS/IPS automates broker/dealer change process between Broker/Dealers and Insurance Carriers.
• A link between the ACATS system and the IPS system to allow insurance assets to be included in a ACATS transaction.
• IPS will be the link to the Insurance Carriers, as FundServ acts as the link for mutual fund assets in ACATS/FundServ.
• ACATS/IPS automates broker/dealer change process between Broker/Dealers and Insurance Carriers.
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ACATS/IPS - Goal
“To automate the Broker/Dealer change process for Annuity contracts between Broker/Dealers, Banks and Insurance Carriers” by leveraging the ACATS and IPS processing systems”
“To automate the Broker/Dealer change process for Annuity contracts between Broker/Dealers, Banks and Insurance Carriers” by leveraging the ACATS and IPS processing systems”
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ACATS/IPS - Benefits
•Elevate level of Customer Service
•Eliminate “Lost” Annuity Contracts & Revenue
•Automate Transaction Processing
•Automate Notification of Transfer
•True “Paperless” Process
•Elevate level of Customer Service
•Eliminate “Lost” Annuity Contracts & Revenue
•Automate Transaction Processing
•Automate Notification of Transfer
•True “Paperless” Process
ACATS/IPS Process Overview ACATS/IPS Process Overview
ACATS IPS
ReceivingBroker/Dealer
InsuranceCarrier
DeliveringBroker/Dealer
1.TI
1.TI 2. AT
2. AT
3. IR 3. IFT
3.IR
4. IFT (Accept/Reject Confirmation)
IFT (Corrective Action)
4. IFT (Accept/Reject Confirmation)
4. IFT (Accept/Reject Confirmation)
IFT (Corrective Action)
IFT (Cor. Action Confirm)IFT (Cor. Action Confirm)
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ACATS/IPS – Production
• Insurance Carriers:• Allstate
• The Hartford
• Pacific Life Insurance
• Broker/Dealers:• Merrill Lynch
• Piper Jaffray (Beta)
• Robert W. Baird (Beta)
• Stifel Nicolaus (Beta)
• Wachovia Securities (Beta)
• Wells Fargo Investments (Beta)
• Insurance Carriers:• Allstate
• The Hartford
• Pacific Life Insurance
• Broker/Dealers:• Merrill Lynch
• Piper Jaffray (Beta)
• Robert W. Baird (Beta)
• Stifel Nicolaus (Beta)
• Wachovia Securities (Beta)
• Wells Fargo Investments (Beta)
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ACATS/IPS – Website Info
•insurance.dtcc.com• IFT Record Layouts
• Standard Usage
• ACATS/IPS User Guide
• Selling Agreement Samples
• Fact Sheets
•acats.nscc.com• ACATS Record Layouts
• ACATS/IPS User Guide
•insurance.dtcc.com• IFT Record Layouts
• Standard Usage
• ACATS/IPS User Guide
• Selling Agreement Samples
• Fact Sheets
•acats.nscc.com• ACATS Record Layouts
• ACATS/IPS User Guide
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Strategic Initiatives of SIA CAT Division
•Increasing financial institutions participation in ACATS• Banks – Sub-committee meeting every 3
weeks
•Coordinated by Bill Kapogiannis
• Insurance Companies – Continue to grow ACATS/IPS interface
• Mutual Funds
•Liquidations
•Potentially shortening the ACATS cycle – 7 to 4 days
•Increasing financial institutions participation in ACATS• Banks – Sub-committee meeting every 3
weeks
•Coordinated by Bill Kapogiannis
• Insurance Companies – Continue to grow ACATS/IPS interface
• Mutual Funds
•Liquidations
•Potentially shortening the ACATS cycle – 7 to 4 days
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Proposed Process Change
• The ACATS process for full account transfers facilitates fast and efficient transfer of client assets. Both the investor and the member firms benefit from speed and efficiency with which client transfer request can be communicated, validated and settled through ACATS.
• The industry as a whole would realize significant processing efficiencies and standardization provided non-ACAT firms fully participated in the ACATS process
• Specifically, Mutual Fund Companies and current ACATS participants would greatly increase processing efficiencies and standardize the transfer process by leveraging the ACATS functionality currently available to Banks (and other non-broker/dealer firms) for non-valued transfers.
• The ACATS process for full account transfers facilitates fast and efficient transfer of client assets. Both the investor and the member firms benefit from speed and efficiency with which client transfer request can be communicated, validated and settled through ACATS.
• The industry as a whole would realize significant processing efficiencies and standardization provided non-ACAT firms fully participated in the ACATS process
• Specifically, Mutual Fund Companies and current ACATS participants would greatly increase processing efficiencies and standardize the transfer process by leveraging the ACATS functionality currently available to Banks (and other non-broker/dealer firms) for non-valued transfers.
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Benefits
•Mutual Fund Companies would be able to utilize the Partial Transfer Receive and Partial Transfer Deliver functions to move client assets.
•Mutual fund companies would no longer be dependent upon instructions from the broker/dealer.
•Increase the level of client satisfaction through greater reliability and speed
•Mutual Fund Companies would be able to utilize the Partial Transfer Receive and Partial Transfer Deliver functions to move client assets.
•Mutual fund companies would no longer be dependent upon instructions from the broker/dealer.
•Increase the level of client satisfaction through greater reliability and speed
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Benefits con’t…
•There would be a diminished risk of re-registered shares left unaccounted for at the fund companies; these positions become seemingly lost to the client
•Retirement transfers between funds and broker/dealers would no longer require the creation of intermediary accounts
•Participant firms and Mutual Fund Companies would have a standardized, automated process for handling non-ACATS transfers by introducing them into existing ACAT functionality.
•There would be a diminished risk of re-registered shares left unaccounted for at the fund companies; these positions become seemingly lost to the client
•Retirement transfers between funds and broker/dealers would no longer require the creation of intermediary accounts
•Participant firms and Mutual Fund Companies would have a standardized, automated process for handling non-ACATS transfers by introducing them into existing ACAT functionality.
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Next Steps
Createindustrycommittee.Thefollowingfundcompaniesareparticipating:
•Putnam
•Fidelity
•Janus
•Developdetailedprocessflowandrequirements
Createindustrycommittee.Thefollowingfundcompaniesareparticipating:
•Putnam
•Fidelity
•Janus
•Developdetailedprocessflowandrequirements
LIQUIDATION OF MUTUAL FUNDS VIA THE ACAT SERVICE
IN TODAY’S ENVIRONMENT
SPEED AND ACCURACY IS THE KEY
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ISSUES
•RECEIVING AND DELIVERING FIRMS DO NOT HAVE A STANDARD OR UNIFORM PRACTICE FOR LIQUIDATING RECEIVER ADJUSTED MUTUAL FUNDS;
•INVESTORS HAVE LIMITED UNDERSTANDING OF WHY CERTAIN HOLDINGS CANNOT BE TRANSFERRED OR HELD AT NEW BROKER DEALER.
•RECEIVING AND DELIVERING FIRMS DO NOT HAVE A STANDARD OR UNIFORM PRACTICE FOR LIQUIDATING RECEIVER ADJUSTED MUTUAL FUNDS;
•INVESTORS HAVE LIMITED UNDERSTANDING OF WHY CERTAIN HOLDINGS CANNOT BE TRANSFERRED OR HELD AT NEW BROKER DEALER.
Branch Offices
Processes
Operations Depts.
MUTUAL MUTUAL FUNDSFUNDS
LIQUIDATIONS
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WHAT WE THINK WE NEED
•Develop new mechanism/transaction type;
•Only Full ACATS will be eligible;
•Firms need to establish consistency;
•Firms will need internal control to prevent selling asset types not eligible
•Develop new mechanism/transaction type;
•Only Full ACATS will be eligible;
•Firms need to establish consistency;
•Firms will need internal control to prevent selling asset types not eligible
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Next steps
•WHITE PAPER NEXT MONTH
•Comments welcomed and encouraged
•WHITE PAPER NEXT MONTH
•Comments welcomed and encouraged
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QUESTIONS ?QUESTIONS ?
