Post on 03-Jul-2015
transcript
Managed Accounts Service
David H. Gardner and Brett GinterThe Depository Trust & Clearing Corporation
October 17, 2006
The Bank Depository User Group2006 Annual Meeting
Managed Accounts Service
3
Separately Managed Accounts Defined
• A portfolio of individually owned securities managed on behalf of a client
• Investment Managers tailor account based on individual client needs restrictions and tax sensitivities
• Single all inclusive wrap fee
• Sponsors-Managers-Service Providers
• Types of accounts: SMA, MSP, MDP, UMA, UMH
4
• Managed Accounts are the fastest growing product in the financial
services industry- 15%-25%
• Between 1992 and 2003 private banks’ portion of the overall wealth market plummeted from 62% to 24%
• 5 Wirehouse sponsors hold 80% of MA AUM with Banks having less than 8% market share
• 70% of Banks surveyed this year are employing “open architecture” between internal and external offerings (3rd party)
• Your conflict is in your culture and bureaucracies not your infrastructure
• Portfolio construction and performance is no longer a simple allocation strategy of stocks-bonds-cash
• In 2Q of this year, a Bank was listed in the top 3 firms for SMA asset growth
Why Managed Accounts?
5
Why Did We Build This Service?
• We were asked to. Industry leaders and the MMI recognize data standards, consistent processes and centralized connectivity are vital to support continued industry growth. A bigger piece of a $12 trillion pie
• Current environment is inefficient, costly to operate, error prone. It became a one to many environment preventing an efficient many to many environment
• Participants don’t speak the same language or use similar processes, so it’s not scalable
• High risk operations rely on email/fax/paperwork, so it lacks customer data integrity and security
• To reduce the barriers to entry for consumer choice and sponsor offerings
• Leverages DTCC infrastructure and secure network to create seamless communications and straight-through processing of these complex accounts
6
MAS – Under the Hood
• Centralized Communications HUB: one to many
• Open Architecture & XML Compliant
• Utilizes MMI 2.0 Standard Data Messaging
• Provides Standard Platform for Account Set-up & Reporting
• Conduit for Account Messages Between All Participants
• Sponsors Save Money by Eliminating Redundant Systems to Support Third Party Investment Manager Communications
• Increases Operational Efficiencies
• Reduces Error Risk
7What is a Data Standard?(Disparate processes to a standard format)
Data FieldsControl NumberNotification TypeNotification DateNotification TimeSenderReceiverClient Account NumberLegal Account TitleClient Identification NumberClient Identification DescriptionCustodian DesignationCustodian Acct NumberSponsor ProgramInvestment Manager StyleCurrencyBranch Ledger NumberFC/Team NumberFC/Team Name3rd Party Identification3rd Party NameFC/Team Phone NumberFC/Team Address 1-4FC/Team CityFC/Team StateFC/Team ProvinceFC/Team ZipFC/Team CountryFC/Team Fax NumberFC/Team e-mailFC/Team correspond via e-mail
Data FieldsMargin/CollateralTotal Account ValueCash Value for this accountSecurity Value for this accountCustodian ContactCustodian telephone number Clearing FirmClearing NumberInvestment Manager ChangeClient Account Number ChangeOld Client Account NumberAccount TypeAccount Type - ERISAAcct Risk ToleranceTax StatusManage Tax AwareTax Strategy Transition InstructionsMuni Account State DesignationMuni Account State Designation CodeSystematic DistributionSystematic Distribution Start DateDistribute All IncomeSystematic Distribution AmountUnsupervised AssetsInvestment PolicyNew AccountTerminated Investment ManagerAccount Style ChangePrior Investment StyleValue of Client AccountsClient 1 PrefixClient 1 SalutationClient 1 Suffix
Data FieldsClient 1 TitleClient 1 Last NameClient 1 First NameClient 1 Middle NameClient 1 Address Line 1-4Client 1 CityClient 1 StateClient 1 Zip codeClient 1 ProvinceClient 1 State of ResidenceClient 1 CountryClient 1 Phone NumberClient 1 Fax NumberClient 1 CorrespondenceClient 1 E-mail AddressClient 1 Correspondence via e-mailEstimated Net WorthDate of Birth: Client 1Designated Country of the Client ResidenceDesignated Country of the CitizenshipTotal Annual IncomeClient Risk ToleranceProxy VotingFederal Tax RateState (and local) Tax RateClient 2 PrefixClient 2 SalutationClient 2 SuffixClient 2 TitleClient 2 Last NameClient 2 First NameClient 2 Middle Name
Data FieldsDate of Birth: Client 2Expected Retirement Date Client 1Expected Retirement Date Client 2Interested Party NameInterested Party CategoryInterested Party Address 1-4Interested Party CityInterested Party StateInterested Party ProvinceInterested Party Zip CodeInterested Party CountryInterested Party e-mail addressInterested Party CorrespondenceInterested Party Correspondence via e-mailDoes client have other Managed AccountsOther Investment Manager(s)Questionnaire TypeQuestionnaire Answer(s)Risk Profile SummaryTime HorizonRestrictionsRestriction TypeRestriction Rating Agency NameRestriction Rating Agency CodeRestriction Activity TypeRestriction QualifierRestriction DescriptionAccount Billing MethodSecond Request Notice
New Account Set-Up and its data elements
8
Standard Messages – Phased Release
Corporate Actions & Fee Billing
Account Maintenance
Account Profile: Open, Change, Terminate
Voluntary Corporate Actions
Voluntary Corporate Actions Decision
Voluntary Corporate Actions Processing
Proxy Information Client Override
Fees Summary
Fees Detail
Tax Trading Guidelines
Specific Security Tax Trading Guidelines
Wash Sale Restriction
Short Positions
Debit Cash
Investment Restriction
Custodian Change
FC/Team Change
Halt Trading/Resume Trading
Investor Manager Style Change
New Account Profile
New Account Funding
Authorization to Trade
Client Profile Update
Account Termination
Contributions
Distributions
Release 17 Messages
Release 210 Messages
Release 36 Messages
Account Setup Message $7.50
Other Messages
$5.00
9
Current State: Redundant Many to Many
$$ Processing Risk $$
Operating Redundancy
Non-secure non-scalable network
10Future State with DTCC MAS Using MMI 2.0 Standards
BankSponsor
DTCC MAS
Ent
itlem
ent
Va
lidat
ion
Au
dit
Rou
tingNew Account Profile
SENT
2.0
Ok to use?
MM
I 2.0 Used ?
Trail and T
ime
Where to go ?
Other 3rd party Investment Managers - N
Internal Investment Manager
New Account Profile Received
2.0
11
How do you get from where you are to MAS?
• Outsource (TAMP) or Not
• Front End Changes vs Translation Layer
• Batch vs Intraday Batch vs Message Based
• Institutional vs SMA processing
• Operational Effectiveness
• Enterprise Initiatives
• Messaging
• Workflow
• Security
• Connectivity
• Etc…
12
Smith BarneyG
TS
Tra
nsla
tor
DTCC MAS
Ent
itlem
ent
Val
idat
ion
Au
dit
Rou
ting
Internal Investment Manager
DTCC/Citigroup Approach
Other 3rd party Investment Managers - N
13
Outsourced (TAMP) Model – Sponsor
Ada
pter
sDTCC MAS
En
title
men
t
Val
idat
ion
Aud
it
Rou
ting
Outsourcer
(TAMP)
Other 3rd party Investment Managers -
N
Internal Investment Manager
Application Provider 1
Bank Sponsor
Bank Sponsor
Bank Sponsor Application
Provider 2
14
Outsourced Model – Investment Manager
Sponsor Outsourcer
DTCC MAS
Ent
itlem
ent
Va
lidat
ion
Au
dit
Ro
utin
g
Ad
apte
rs
Investment Manager 1
Investment Manager N
Application Providers
Investment Manager 2
15
Data Gathering & Current State
Develop Future State
Develop High Level
Release Plan
• Develop Future End State
• Develop Client Current State• Complete Data Gathering Session• Compile Business Requirements• Compile Functional Requirements • Develop DTCC Current State
2-4 weeks
Current State
3-4 weeks3-4 weeks
Future State High Level Release
• Develop Release Plan• Complete Interim End States
First Steps
16
First Steps
EmailSPInfo, FCComm,
CommSMA_ATNeeds
ResearchN/AFC FileTBDOFC/Team e-mail
FCNmSPInfoSMA_ATStraight Copy Straight CopyFC File
FC Master FieldO
FC/Team Phone Number
FCIDSPInfoSMA_ATFC NameStraight CopyFC FileFC
NameOFC/Team Name
LegalTitleAcctInfoSMA_ATStraight Copy Client CodeStraight Copy
Customer File
Client NameM
Legal Account Title
std:AcctNumAcctInfoSMA_STD, SMA_AT
Straight Copy Client Account
Code Straight Copy
New Account
File
Client Account
#MClient Account Number
IMID SMA_STD, SMA_AT
4 Digit Code Defined by
MMI or DTCC. Straight CopyProduct
FileNew FieldMReceiver
std:SPIDSPInfoSMA_STD, SMA_AT
4 Digit Code Defined by
MMI or DTCCHardcodeCustomer
FileDTCC/M
MIMSender
BusinessMsgNameDataType SMA_AT
Predefined By MMI
Table Cross Reference TranslationN/A
MMI Predefin
edMNotification Type
SMASRefID SMA_ATAlgorithmSimple
TranslationN/ADTCC/M
MI MControl Number
Element ReferenceElement NameDTCC
SchemaApproachTranslation
ActionSystem Source
Field Source
M/OData Fields