DTCC to launch mutual fund profile service database

Source: Depository Trust & Clearing Corporation

The Depository Trust & Clearing Corporation (DTCC) today announced plans to launch its new Mutual Fund Profile Service database in July.

The redesigned database will provide the fund community with an automated, centralized repository for a broad range of information contained in a fund's prospectus and expand the service's role as a primary industry source for rules-based processing.

"This initiative will deliver major efficiencies to the industry by providing a single central resource for the dissemination of fund information and offering greater operational flexibility," said Ann Bergin, managing director and general manager, DTCC Distribution Services.

Offered by DTCC's National Securities Clearing Corporation subsidiary, Mutual Fund Profile Service also includes features that provide users with data about fund distributions, as well as contact information and the processing capabilities of funds and firms.

The database will include information about a fund's investment objectives; minimum and maximum investment requirements; fee schedules; breakpoint schedules and linkage rules; and other fund rules. The redesign will make it much easier for funds to input data and ensure that every piece of information is relevant.

"Having that information readily available and up-to-date will give broker/dealers and other fund distributors immediate access to the rules governing a fund and also help them with compliance issues - applying proper breakpoints to a customer's account, for example," Bergin explained.

Kathy Joaquin, director of Operations & Distribution for the Investment Company Institute, said, "The end result will provide a standard and a complete source for mutual fund security data, and move our industry further towards a model for efficient operations processing."

How It Will Work

DTCC's solution is to replace the current technology, which is 10 years old, with new technology that will allow data to be fed into the database at one level and automatically flow - or "relate" - to other levels. The current model does not have that flexibility.

The new model is structurtructured on four levels, or hierarchies, of information, starting with the Management Company level and followed by Share Class, Fund Portfolio and Security Identifier (CUSIP numbers provided by Standard & Poor's) for each portfolio.

Rights of Accumulation (ROA) for example, can be entered once at the management company level and applied to each relevant security at the Security Identifier level. Or a redemption fee can be input at the Fund Portfolio level and then applied to all the appropriate share classes at that level. Updates can be handled the same way.

"The redesign of Profile will benefit fund companies tremendously," explained Laura S. Stanley, vice president, AIM Investment Services, Inc. "The ability to enter information once and apply data common to all funds within the same class, or all funds within a portfolio, will result in the elimination of repetitious data entry; and it will streamline our quality-control process, as the data must be validated only once." Stanley is a member of an ICI Profile Steering Committee working collaboratively with DTCC to remodel the service.

As part of the redesign, DTCC will be creating new Web screens that will allow users to query and retrieve the same information on the screen that can be found in a fund's prospectus. New record layouts will be available in February for fund companies and firms so they can reprogram their systems to be compatible with the new files. Like most of NSCC's Mutual Fund Services, Profile has both a mainframe application and a front-end interface through DTCC WebDirect.

Interest in Profile has been growing since the Joint NASD/Industry Task Force on Breakpoints issued its report and singled out the service for its ability to help meet the challenge of identifying and applying breakpoint discounts. In 2005, NASD developed a link to Profile that allows NASD to draw information on breakpoint schedules and linkage rules, repopulate it within its own Web site, and provide that information to its members and investors.

"This was an opportune time to complete a full assessment of the service, identify its weaknesses, and design a new system that will be highly resilient and that can easily be enhanced in the future to accommodate new informational needs of the industry," Bergin said.

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