AIP is a service offering of DTCC's National Securities Clearing Corporation (NSCC) subsidiary.

Created with the collaboration of industry leaders, the AIP service is designed to bring significant efficiencies to a firm's operations and support market growth through an automated, centralized platform. In addition to linking broker-dealers, fund managers, administrators and custodians, the service provides end-to-end processing of alternative investments such as hedge funds, funds of funds, private equity, real estate investment trusts (REITs) and limited partnerships. AIP will also support pre-trade fund profiles, trade subscription documentation, money settlement and post-trade reporting.

"This new platform provides a central clearing facility for operational functions, automating certain pre-trade data collection and all processes related to trade orders, account settlement and post-trade reporting," said Kyle Kerbawy, managing director from BNY Mellon Shareowner Services. "For our clients and their selling partners, additional sales should result as administration and management become more mainstream while for us, this streamlined administration eliminates many manual administrative processes."

"The AIP service now enables us to provide our customers and their clients with the ability to view equity, fixed income, mutual fund, and alternative investment positions on one statement," said Gerald Gregorio, managing director in the customer processing and services group at Pershing. "The end result is that introducing broker-dealers, registered investment advisors and money managers will be able to better manage their clients' investment portfolios in a more effective and efficient manner."

Centralized, Consolidated Information

Processing alternative investment products is currently handled through hardcopy, fax, email, phone calls and spreadsheets, and the lack of automation and centralization prolongs the transaction process, creates tremendous risk and blocks potential distribution channels. Not only is manual processing of these instruments error-prone, it also hinders business growth as volume outpaces the industry's ability to manage it.

"Growth projections in the alternatives space are aggressive; however operational scalability has become a focus as participants position themselves to exploit these opportunities," said Ann Bergin, managing director, DTCC Wealth Management Services. "We believe our AIP service can make a marked difference in the ability to penetrate currently untapped distribution channels for these products."

Feedback from Customers

In an outreach to customers, DTCC recently sponsored its first AIP Customer Forum, on Nov. 14. This customer "think tank" brought together almost 100 customers from 50 leading firms to address issues facing the industry, including increased regulatory scrutiny, risk management, processing, settlement and operational best practices.

Based on feedback from customers at the Forum, DTCC's further enhancements to the AIP service will address the operational issues that are most burdensome for the business today, including requirements for certain legal documents and physical signatures.

The AIP service was developed at the request of, and in consultation with, industry participants worldwide. NSCC received regulatory approval from the U.S. Securities and Exchange Commission to launch the AIP service in May 2008.