Bank ACATS

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(No Transcript)
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Bank ACATS
BDUG Annual Meeting October 24,2005 Scottsdale,
AR
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Bank ACATS Program

• Topics
• History of Program
• Primary Differences
• Benefits of Participation
• Current Bank/Stats
• Current Initiatives
• Questions

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History of Program

• Pilot for Banks 1999
• Originally 7 Banks Participating
• Good Faith Effort Participation Not Mandated
• Most Brokerage Firms Participated in Pilot
• DTCC Opened Program to all Banks June 1999

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Primary Differences

• Good Faith Effort Not Mandated
• Paperwork Required
• Assets Move Free of Payment
• No Valued Fails

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Benefits

• Customer Satisfaction
• Reduced Timeframe to Transfer Account
• Initial Experience a Positive One
• Competitive Advantage
• Cost Reduction
• Follow up Process
• Pending Reversal of Transactions
• Ability to Trade and Collect Fees Sooner

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Benefits

• Electronic Notification of Assets and Cash
• Standardization/Automation
• Ability to Accelerate Process
• Residual Balances Processing
• Contacts within Financial Community

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Current Users

• Huntington Natl
• IBT
• Key Bank
• Mellon Bank
• Natl City Bank
• Reliance Trust
• SEI Trust Co.
• State Street Bank
• SunTrust Bank
• UMB
• Union Bank of Cal
• Wachovia

• Bank of America
• Bank One Trust Co.
• Bank of NY
• Citigroup PVT Bank
• City Natl Bank
• Comerica
• Country Trust Bank
• First American Trust
• Fleet Bank
• FNB Omaha
• Glenmede Trust Co.

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Volumes (Transactions)
Year TIFS Assets Settled Increase Settled
2001 4,800 7,200 58,800 -
2002 6,900 16,800 90,000 53
2003 9,600 28,800 114,000 27
2004 14,400 36,000 138,000 21
2005 15,000 54,000 156,000 8
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ACATS Process Overview
Snap Shot of Assets currently held in the Account
6-7 Day Cycle
Stocks Bonds
ACATS
Mutual Funds
Mutual Fund Companies
Cost Basis Information
IPS/Annuities
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Current Initiatives

• Trust System Automation
• Discussions with Regulatory Agencies
• Cost Basis / IPS
• Mutual Funds as Participants

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Cost Basis Reporting Service
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Cost Basis Reporting Service

• Topics
• General Description of CBRS - What is it?
• Benefits of CBRS
• Current CBRS Users / Volume
• CBRS Fees

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What is CBRS?

• The Cost Basis Service (CBRS is an automated
  system that provides brokerage firms, banks and
  other financial organizations the ability to
  transfer cost basis information from one firm to
  another on any asset transfer through ACATS
• Passes Asset and Tax Lot information for customer
  to calculate tax liability (gain loss)
• Available for a wide range of assets

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Benefits of CBRS

• Expands firms customer service
• Automates the transfer of Cost Basis data
• Centralizes and standardizes the information
  transfer
• Eliminates the manual re-entry and/or
  recalculation of Cost Basis portfolio information
• Significantly reduces cost associated with
  obtaining and maintaining Cost Basis data

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Current CBRS Users

• Currently 27 firms using CBRS
• Merrill Lynch Linsco Private Ledger
• Citigroup Janney Montgomery Scott
• UBS Financial Pershing
• Piper Jaffray HSBC Securities
• Stifel Nicolaus Robert Baird
• First Clearing Davenport
• Wells Fargo Investments Huntleigh Securities
• Ferris, Baker Watts Sterne, Agee Leach
• National Investors Hilliard Lyons
• Wedbush Morgan Morgan Stanley DW
• Legent Clearing Bear Stearns
• Scott Stringfellow Raymond James
• H R Block Morgan Keegan
• National Financial

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Current CBRS Volume

• Approximately 175,000 CBRS records processed on a
  daily basis
• Approximately 35,000 assets and 140,000 tax lot
  records
• Average 4.0 tax lots per asset

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CBRS FEES

• 9 cents per asset record received (Receiver firm
  only)
• Can have unlimited amount of associated Tax Lots
  per asset

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CBRS Via PC Web

• Screen Input capability available
• Expanded file upload capability for CBRS
• Important Notice A5999 dated March 14, 2005

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ACATS/IPS Overview
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What is ACATS/IPS?

• A link between the ACATS system and the IPS
  system to allow insurance assets to be included
  in a ACATS transaction.
• IPS will be the link to the Insurance Carriers,
  as FundServ acts as the link for mutual fund
  assets in ACATS/FundServ.
• ACATS/IPS automates broker/dealer change process
  between Broker/Dealers and Insurance Carriers.

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ACATS/IPS - Goal

• To automate the Broker/Dealer change process for
  Annuity contracts between Broker/Dealers, Banks
  and Insurance Carriers by leveraging the ACATS
  and IPS processing systems

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ACATS/IPS - Benefits

• Elevate level of Customer Service
• Eliminate Lost Annuity Contracts Revenue
• Automate Transaction Processing
• Automate Notification of Transfer
• True Paperless Process

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ACATS/IPS Process Overview
Delivering Broker/Dealer
IPS
Insurance Carrier
4. IFT (Accept/Reject Confirmation)
4. IFT (Accept/Reject Confirmation)
1.TI
2. AT
ACATS
3. IR
3. IFT
3.IR
1.TI
2. AT
4. IFT (Accept/Reject Confirmation)
Receiving Broker/Dealer
IFT (Corrective Action)
IFT (Corrective Action)
IFT (Cor. Action Confirm)
IFT (Cor. Action Confirm)
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ACATS/IPS Production

• Insurance Carriers
• Allstate
• The Hartford
• Pacific Life Insurance
• Broker/Dealers
• Merrill Lynch
• Piper Jaffray (Beta)
• Robert W. Baird (Beta)
• Stifel Nicolaus (Beta)
• Wachovia Securities (Beta)
• Wells Fargo Investments (Beta)

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ACATS/IPS Website Info

• insurance.dtcc.com
• IFT Record Layouts
• Standard Usage
• ACATS/IPS User Guide
• Selling Agreement Samples
• Fact Sheets
• acats.nscc.com
• ACATS Record Layouts
• ACATS/IPS User Guide

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Strategic Initiatives of SIA CAT Division

• Increasing financial institutions participation
  in ACATS
• Banks Sub-committee meeting every 3 weeks
• Coordinated by Bill Kapogiannis
• Insurance Companies Continue to grow ACATS/IPS
  interface
• Mutual Funds
• Liquidations
• Potentially shortening the ACATS cycle 7 to 4
  days

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Proposed Process Change

• The ACATS process for full account transfers
  facilitates fast and efficient transfer of client
  assets. Both the investor and the member firms
  benefit from speed and efficiency with which
  client transfer request can be communicated,
  validated and settled through ACATS.
• The industry as a whole would realize significant
  processing efficiencies and standardization
  provided non-ACAT firms fully participated in the
  ACATS process
• Specifically, Mutual Fund Companies and current
  ACATS participants would greatly increase
  processing efficiencies and standardize the
  transfer process by leveraging the ACATS
  functionality currently available to Banks (and
  other non-broker/dealer firms) for non-valued
  transfers.

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Benefits

• Mutual Fund Companies would be able to utilize
  the Partial Transfer Receive and Partial Transfer
  Deliver functions to move client assets.
• Mutual fund companies would no longer be
  dependent upon instructions from the
  broker/dealer.
• Increase the level of client satisfaction through
  greater reliability and speed

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Benefits cont

• There would be a diminished risk of re-registered
  shares left unaccounted for at the fund
  companies these positions become seemingly lost
  to the client
• Retirement transfers between funds and
  broker/dealers would no longer require the
  creation of intermediary accounts
• Participant firms and Mutual Fund Companies would
  have a standardized, automated process for
  handling non-ACATS transfers by introducing them
  into existing ACAT functionality.

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Next Steps

• Create industry committee. The following fund
  companies are participating
• Putnam
• Fidelity
• Janus
• Develop detailed process flow and requirements

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LIQUIDATION OF MUTUAL FUNDS VIA THE ACAT SERVICE

• IN TODAYS ENVIRONMENT
• SPEED AND ACCURACY IS THE KEY

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ISSUES

• RECEIVING AND DELIVERING FIRMS DO NOT HAVE A
  STANDARD OR UNIFORM PRACTICE FOR LIQUIDATING
  RECEIVER ADJUSTED MUTUAL FUNDS
• INVESTORS HAVE LIMITED UNDERSTANDING OF WHY
  CERTAIN HOLDINGS CANNOT BE TRANSFERRED OR HELD AT
  NEW BROKER DEALER.

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MUTUAL FUNDS
Branch Offices
Operations Depts.
Processes
LIQUIDATIONS
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WHAT WE THINK WE NEED

• Develop new mechanism/transaction type
• Only Full ACATS will be eligible
• Firms need to establish consistency
• Firms will need internal control to prevent
  selling asset types not eligible

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Next steps

• WHITE PAPER NEXT MONTH
• Comments welcomed and encouraged

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QUESTIONS ?