The Depository Trust & Clearing Corporation (DTCC) announced today that it will submit its message standards (schemas) for the processing of unified managed accounts/model portfolio programs to The Money Management Institute (MMI), the national organization for the managed investment solution and wealth management industry.
"For four decades, DTCC's mission has been to bring certainty and reliability to the financial markets by managing risk, reducing costs and automating processing. We are continuing this tradition by sharing DTCC's message schemas with the managed solutions market," said Ann Bergin, managing director and general manager, DTCC Wealth Management Services. "This is an important milestone for DTCC and we remain certain that a single platform that centralizes and streamlines communication between investment managers, overlay portfolio managers and program sponsors will help scale the market while facilitating growth and improving overall operational efficiency."
DTCC, in collaboration with other industry partners, has developed a new model management exchange service to address the growing trend of UMA/model-only portfolios. According to the MMI and Dover Financial Research, as of 2Q 2011, UMAs comprised some $138.8 billion of the $2.4 trillion in AUM associated with the managed solutions market. This represents a growth rate of 72% over the same period last year, making UMAs the fastest growing managed solutions segment.
DTCC estimates that approximately 1,500 investment models are currently being distributed across the UMA segment of the industry. By 2017, however, the number of investment models is expected to grow to 14,000 due to the roll out of industry data standards and the implementation of a DTCC communications infrastructure. These developments will make it easier for investment managers to communicate model specifications to UMA platform providers.
"We are extremely pleased that DTCC is making its message standards fully available to the managed accounts' industry," said Gary Jones, lead technology consultant for MMI. "Publishing the schemas on an open-source platform will allow firms to easily access them and offer suggestions for enhancements, keeping them relevant to the demands of the industry."
DTCC's UMA/model schemas are a result of industry wide collaboration. They have been pilot-tested by several users in a production environment.