DTCC Hits Corporate Actions Milestone
The DTCC reached a milestone in June when it distributed 100 million ISO 20022 corporate actions announcement messages to banks, brokerages and other financial institutions, say officials at the industry utility.The DTCC, through its subsidiary, the Depository Trust Company, began distributing ISO 20022 announcement messages in November 2011 after an initial successful pilot. BNY Mellon, Brown Brothers Harriman, JPMorgan Chase and National Financial Services have taken active roles in testing the ISO 20022-based efforts of the DTCC. More than 30 clients are currently in the process of programming for the messages or are already processing the messages in their production environments, say DTCC officials.
The DTCC announces corporate actions events each year for dividends, principal and interest payments, and redemption and reorganization events such as mergers and tender offers, according to the DTCC.
In September 2012, DTCC began a second corporate actions pilot program testing ISO 20022 messages covering the full entitlement and allocation lifecycle for distribution events. The systemic client testing of these messages began this past February.
The next milestone for the corporate actions transformation will come in the fourth quarter of 2013 when the DTCC begins testing in-bound instruction messages via clients, says Rob Epstein, DTCC vice president, Asset Services. “This is a major development since it will be the first time clients will be able to submit their instructions for distributions events to DTCC in an automated fashion,” Epstein says in a statement. DTCC clients communicate these instructions to DTCC manually via terminal and browser interfaces.
DTCC clients are scheduled to transition to the new interface in the second quarter of 2014, say officials. The interface will ultimately incorporate all event types in one system and will cover the entire corporate actions lifecycle from announcements through instructions to allocations.
Woodfield Eases Burdens for Ops and IT Staffs
Woodfield Fund Administration is easing burdens for IT and operations staffs via an “invisible hand” that provides new IT support for portfolio reconciliation, say officials at Woodfield.
The fund administrator’s business, underway since 2005, has grown “very steadily over the years,” in the number and complexity of clients and it became clear that the service provider had to upgrade its IT support for reconciliation, says Frank Franiak, president and CEO of Woodfield. The fund administrator deployed the Recon platform from vendor Smonik Investment Systems in the spring and it has had swift ramifications for the operations and IT staffs.
“We don’t have to use our IT resources the way we had to in the past,” says Tom Richardson, chief operating officer for the third-party administrator, based in Chicago. “Our operations teams are able to do a lot of the programming on the fly for new funds and new things that are happening. It allows us to have better use of our resources.”
Recon automates the retrieval, normalization and uploading of multiple data formats from prime brokers, custodians and administrators, say Smonik officials. For Woodfield, the Recon platform helps with client onboarding, trade reconciliation, matching, exceptions, and reporting, say Woodfield officials. The solution also offers service customization capabilities for new instruments and investment strategies.
“Essentially, what Smonik allows us to do is pass information onto our clients really without being seen,” Richardson says. “They are the invisible hand in the process. Essentially, they’re there to make sure everything gets done seamlessly and correctly.”
The Smonik service mostly targets the needs of equity hedge funds and replaces internally developed and third-party systems, says Franiak, who adds that “Smonik built a better mouse trap than we could.” Woodfield also provides services for fixed-income hedge funds, private equity funds and fund of funds.
By relying on a third-party provider, Woodfield can focus on its core business for the equity hedge fund clients that “are looking for us to deliver new products to them,” Franiak says. “Their concern is that we do it accurately and on time. How it gets done is not something they generally get involved in. … Occasionally, though, with prospective clients, they will want to come in and look at the system as part of their selection process.”
Woodfield did consider other providers, Richardson says. “The people who do our daily operations saw three of the [contenders] and each one of them thought that Smonik was the best one to use,” he says. The operations staff members prefer the ease of use and interface of the Recon software. Smonik also came out on top of the firm’s cost-benefit analysis of the contenders, he adds.
InvestOne Offers Support for Multiple Books of Record
The Asset Arena InvestOne global accounting solution now offers multiple books of record capabilities for asset managers, custodian banks and third-party administrators, say SunGard officials. The latest version is intended to help firms improve operational controls, productivity and regulatory compliance, say vendor officials.
The new features are offered through the Asset Arena Control Center module, which can be integrated with InvestOne and other applications, say officials. Control Center’s tools provide exception management handling and workflow services.
The new accounting functions extend the ways that end-user firms can apply existing datasets and broaden the support for more jurisdictions via multiple books, say vendor officials. The new features could help firms sidestep the need to maintain additional systems and redundant data.
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