412 Customer Account Transfer Section, Inc. A Section of SIFMA - 1 ACATS ACATS Fall Seminar 2011 Fall Seminar 2011 Welcoming Remarks Fidelity Investments Host Firm
Dec 26, 2015
412 Customer Account Transfer Section, Inc. A Section of SIFMA - 1
ACATSACATSFall Seminar 2011Fall Seminar 2011
Welcoming Remarks
Fidelity Investments
Host Firm
412 Customer Account Transfer Section, Inc. A Section of SIFMA - 2
ACATSACATSFall Seminar 2011Fall Seminar 2011
Opening Remarks
Derek Yen – Edward Jones
SIFMA CAT Section Board
412 Customer Account Transfer Section, Inc. A Section of SIFMA - 3
CNS ACATS/Non-CNS ACATS Settlement Proposal
Louis LeporeLouis LeporeDTCCDTCC
412 Customer Account Transfer Section, Inc. A Section of SIFMA - 4
AgendaAgenda
I.I. Non-CNS ACATS Non-CNS ACATS Mutual Funds ProposalMutual Funds Proposal DTC Eligible (but not CNS eligible) DTC Eligible (but not CNS eligible)
Assets ProposalAssets Proposal
II.II. CNS ACATS ModificationsCNS ACATS Modifications
III.III. ACATS Default PricingACATS Default Pricing
IV.IV. PTF Transfer EnhancementsPTF Transfer Enhancements
V.V. ACATS StatisticsACATS Statistics
412 Customer Account Transfer Section, Inc. A Section of SIFMA - 5
Non-CNS ACATS Non-CNS ACATS Risk TodayRisk Today
If NSCC ceases to act for aIf NSCC ceases to act for a Member and initiates a close- Member and initiates a close-out of its account, non-CNS ACATS money incentive out of its account, non-CNS ACATS money incentive charges may be reversed as they are not guaranteedcharges may be reversed as they are not guaranteed
Many of these assets settle away from DTCCMany of these assets settle away from DTCC This may create settlement exposure for Members as This may create settlement exposure for Members as
transactions may have settled versus money in the various transactions may have settled versus money in the various settlement market placessettlement market places
This may require contra Members to negotiate claims of This may require contra Members to negotiate claims of settlement reversal money incentive charges directly with settlement reversal money incentive charges directly with the SIPC trustee the SIPC trustee
Industry working group consisting of SIFMA CAT and SOD Industry working group consisting of SIFMA CAT and SOD Member firms, Services Providers and Regulators was Member firms, Services Providers and Regulators was created to address these issues created to address these issues
412 Customer Account Transfer Section, Inc. A Section of SIFMA - 6
Mutual Funds Proposal Mutual Funds Proposal ModificationsModifications
1)1) Addition of Settle-Prep Status 300 to all non standard ACATS transfers Addition of Settle-Prep Status 300 to all non standard ACATS transfers that contain a mutual fund asset with settlement location 10 (ACATS- that contain a mutual fund asset with settlement location 10 (ACATS- Fund/SERV)Fund/SERV)
Ensures ACATS settlement date of transfer always equals last day Mutual Fund Ensures ACATS settlement date of transfer always equals last day Mutual Fund Company can respond to fund re-registrationCompany can respond to fund re-registration
Impacts the following non-standard transfer types:Impacts the following non-standard transfer types: Partial Transfer Receiver (PTR), Partial Transfer Deliverer (PTD) and Residual Credit Partial Transfer Receiver (PTR), Partial Transfer Deliverer (PTD) and Residual Credit
(RCR(RCR)) Testing made available in NSCC’s PSE test environment as of August 1, 2011Testing made available in NSCC’s PSE test environment as of August 1, 2011 Production implementation scheduled after close of business on October 20, Production implementation scheduled after close of business on October 20,
20112011
2)2) Segregation of mutual fund transaction activity (settlement location 10 Segregation of mutual fund transaction activity (settlement location 10 ACATS- Fund/SERV) within NSCC money settlement code 007ACATS- Fund/SERV) within NSCC money settlement code 007
Original incentive charges for these assets will be removed from NSCC money Original incentive charges for these assets will be removed from NSCC money settlement code 006/008 for consolidation and tracking purposessettlement code 006/008 for consolidation and tracking purposes
Acknowledgement reversal charges will continue to be applied under NSCC Acknowledgement reversal charges will continue to be applied under NSCC money settlement code 007 money settlement code 007
ACATS Settlement Report Autoroute #02090712 will be updated with new total ACATS Settlement Report Autoroute #02090712 will be updated with new total sectionssections
““Totals Included in Net Cash 007” and “Totals Not Included in Net Cash 007Totals Included in Net Cash 007” and “Totals Not Included in Net Cash 007”” No testing available as there are no NSCC programming modifications No testing available as there are no NSCC programming modifications
requiredrequired Production Implementation scheduled after close of business November 3, Production Implementation scheduled after close of business November 3,
20112011
412 Customer Account Transfer Section, Inc. A Section of SIFMA - 7
3)3) Creation of new Mutual Fund Reversal Files for a Creation of new Mutual Fund Reversal Files for a Member close-out eventMember close-out event
4)4) Creation of NSCC Settlement Category Code 34 for posting of mutual Creation of NSCC Settlement Category Code 34 for posting of mutual fund asset incentive money reversals resulting from a Member close-out fund asset incentive money reversals resulting from a Member close-out eventevent
Important Notices A# 7213, P&S# 6783 dated May 19, 2011 Important Notices A# 7213, P&S# 6783 dated May 19, 2011 (revised June 8, 2011) and Important Notice A# 7244, P&S# (revised June 8, 2011) and Important Notice A# 7244, P&S# 6814 dated July 13, 2011 outline all the modifications6814 dated July 13, 2011 outline all the modifications
Modifications (continued)
Mutual Funds Proposal Mutual Funds Proposal
MRO Reversal MRO Comma Delimited
Production Autoroute# 02091076 02091077
Production Implementation November 4, 2011 November 4, 2011
Features Programming required; Empty file distributed daily when no event
occurs
No programming required; File distributed only when
event occurs
“Canned” Test Autoroute# 02981076 02981077
Testing Available August 1, 2011 August 1, 2011
412 Customer Account Transfer Section, Inc. A Section of SIFMA - 8
DTC Eligible (Non CNS Eligible) ProposalDTC Eligible (Non CNS Eligible) ProposalConceptual Proposed SolutionConceptual Proposed Solution
Members would settle assets “free of value” on ACATS Members would settle assets “free of value” on ACATS settlement datesettlement date
NSCC would utilize its Obligation Warehouse (OW) to track the NSCC would utilize its Obligation Warehouse (OW) to track the settlement status of these ACATS transactionssettlement status of these ACATS transactions
NSCC would apply incentive charges only on those transactions NSCC would apply incentive charges only on those transactions which have not completed or failedwhich have not completed or failed
Members would receive instructions from NSCC to re-price the Members would receive instructions from NSCC to re-price the settlement money on these failed transactions to the original settlement money on these failed transactions to the original ACATS market valueACATS market value
Members would subsequently settle these failed transactions Members would subsequently settle these failed transactions versus the original ACATS market value versus the original ACATS market value
Next StepsNext Steps Finalize this solution with industry working group – Q4 2011 Finalize this solution with industry working group – Q4 2011 Design this solution – Q1 2012 Design this solution – Q1 2012 Implement this solution - Q4 2012Implement this solution - Q4 2012 Finalize and design a solution for the remaining Non-CNS ACATS Finalize and design a solution for the remaining Non-CNS ACATS
settling assets (i.e., government securities) – Q4 2012settling assets (i.e., government securities) – Q4 2012
412 Customer Account Transfer Section, Inc. A Section of SIFMA - 9
CNS ACATS ModificationsCNS ACATS Modifications
As a result of the “CNS for Value” initiative, ACATS As a result of the “CNS for Value” initiative, ACATS transactions can no longer be “netted” in CNS with other transactions can no longer be “netted” in CNS with other settling trade obligationssettling trade obligations
CNS ACATS transactions are not guaranteedCNS ACATS transactions are not guaranteed CNS ACATS transactions settle “free of value”CNS ACATS transactions settle “free of value”
Proposed SolutionProposed Solution NSCC proposes to create a new CNS sub-account just for NSCC proposes to create a new CNS sub-account just for
ACATS transactionsACATS transactions Sub-account will net ACATS transactions on settlement dateSub-account will net ACATS transactions on settlement date CNS ACATS long allocations (receives) and short covers (delivers) CNS ACATS long allocations (receives) and short covers (delivers)
would occur through a new DTC account (i.e., 889)would occur through a new DTC account (i.e., 889) Open transactions on ACATS settlement date will net with regular Open transactions on ACATS settlement date will net with regular
CNS transactions after money settlement completed and 100% of CNS transactions after money settlement completed and 100% of the market value has been collected on open failsthe market value has been collected on open fails
412 Customer Account Transfer Section, Inc. A Section of SIFMA - 10
ACATS Default ACATS Default PricingPricingCurrent ProcessCurrent Process
When ACATS cannot find a price for a security it uses the greater of the submitter’s value or the default price determined by the Asset Pricing category chosen by the submitter on asset validation
Currently, asset pricing categories EQU, FEQU, FDEB are capped at $20,000
New ProcessNew Process If ACATS cannot find a price for a security, always use If ACATS cannot find a price for a security, always use
submitter’s valuesubmitter’s value When entering assets in an ACATS transfer, the submitting firm When entering assets in an ACATS transfer, the submitting firm
should value each asset the same as it is reported on their should value each asset the same as it is reported on their customer’s statementcustomer’s statement
This was approved by both the SIFMA CAT Division and FINRA This was approved by both the SIFMA CAT Division and FINRA NSCC planning to implement change by Q2 2012NSCC planning to implement change by Q2 2012
412 Customer Account Transfer Section, Inc. A Section of SIFMA - 11
Enhancements for PTF TransfersEnhancements for PTF TransfersI. Fund/SERV 018 Record – Support Passage of Cost BasisFund/SERV 018 Record – Support Passage of Cost Basis
The following field will be added on Fund/SERV 018 record and The following field will be added on Fund/SERV 018 record and extracted from ACATS “TI” record for a extracted from ACATS “TI” record for a Position Transfer Fund Position Transfer Fund (PTF) transfer type (PTF) transfer type onlyonly
Originating Deliverer Customer Account Number at Firm fieldOriginating Deliverer Customer Account Number at Firm field To be populated on all PTF transfers when firm = delivererTo be populated on all PTF transfers when firm = deliverer
No programming changes required for firmsNo programming changes required for firms
II. PTF- Gift IndicatorII. PTF- Gift Indicator ACATS will add code to system reject any PTF transfer whereby ACATS will add code to system reject any PTF transfer whereby
the firm is receiver and “pulling” the account from Fund the firm is receiver and “pulling” the account from Fund Company indicating it as a giftCompany indicating it as a gift
412 Customer Account Transfer Section, Inc. A Section of SIFMA - 12
ACATS StatisticsACATS Statistics
Users Firm Type
141 Brokers
38 Banks
114 Mutual Funds (PTF’s Only)
Month Month Transfer Type Transfer Type # Submitted# Submitted
August 2011 Full (broker to broker) 253,229
July 2011 Full (broker to broker) 211,938
August 2011 Full (bank on at least one side)
4,917
July 2011 Full (bank on at least one side)
4,426
August 2011 PTF (firm and fund) 40,458
July 2011 PTF (firm and fund) 38,855
412 Customer Account Transfer Section, Inc. A Section of SIFMA - 13
Questions?
412 Customer Account Transfer Section, Inc. A Section of SIFMA - 14
Process Service Improvement Process Service Improvement Subcommittee Updates Subcommittee Updates
Evan Oliveaux Evan Oliveaux
National FinancialNational Financial
Steve GoodrichSteve Goodrich
TD AmeritradeTD Ameritrade
412 Customer Account Transfer Section, Inc. A Section of SIFMA - 15
PSIS DefinedPSIS Defined
As of 8/13/11As of 8/13/11
126 Members126 Members
The Process and Service Improvement The Process and Service Improvement Subcommittee looks to leverage new Subcommittee looks to leverage new
technology and assess alternative solutions technology and assess alternative solutions to improve transfer processes. to improve transfer processes.
412 Customer Account Transfer Section, Inc. A Section of SIFMA - 16
Working GroupsWorking Groups
Regulator
y
Mutual Funds 27
Best Practices 27
Non-ACAT 27Regulatory 24Client Experience 19
PSIS Chair 2
Grand Total 126
Non-ACAT
Mutual Funds
BestPractices
ClientExperienc
e
412 Customer Account Transfer Section, Inc. A Section of SIFMA - 17
Recent Working Group Recent Working Group TopicsTopics
Client Experience Working Client Experience Working Group:Group:
• Non-transferable fund Non-transferable fund communication analysiscommunication analysis
• Carryover of dividend Carryover of dividend instructions for equities instructions for equities opportunityopportunity
• Explore timing of ACAT Explore timing of ACAT compared to other compared to other methodsmethods
Mutual Fund Working Mutual Fund Working Group:Group:
• Reject AnalysisReject Analysis• PTF Best PracticesPTF Best Practices• Continued use of Continued use of
default registrations default registrations and impact on cost and impact on cost basisbasis
• PIER Report Update PIER Report Update for 2012for 2012
Non-ACAT Working Non-ACAT Working Group:Group:
• Non-standard TOA Non-standard TOA requirementsrequirements
• Firm survey’sFirm survey’s• Internal proceduresInternal procedures• Process Process
requirementsrequirements• Signature Signature
guarantee analysisguarantee analysis• Contact listContact listRegulatory Working Group:Regulatory Working Group:
• Rule 11870 educational Rule 11870 educational piecepiece
• Analysis on Important Analysis on Important NoticesNotices
• Rule 4522 – AI’s – how firms Rule 4522 – AI’s – how firms are handlingare handling
• Partner with Best Practice Partner with Best Practice groupgroup
Best Practices Working Best Practices Working Group:Group:
• Document best Document best practices on practices on corrections/reclaimscorrections/reclaims
• Transfer paperwork Transfer paperwork requirementsrequirements
• Settlement functionsSettlement functions
412 Customer Account Transfer Section, Inc. A Section of SIFMA - 18
Firm Contact ListFirm Contact List
• Taken down from SIFMA siteTaken down from SIFMA site• PSIS group as the data gatherersPSIS group as the data gatherers• Michelle Padro has gathered contact Michelle Padro has gathered contact informationinformation
• [email protected]@etrade.com
n Firm NameFirm Namen AddressAddressn Contact NameContact Namen Capacity at firmCapacity at firmn Phone numberPhone numbern E-mail AddressE-mail Addressn Which PSIS working group interests you? Which PSIS working group interests you?
412 Customer Account Transfer Section, Inc. A Section of SIFMA - 19
Questions?
412 Customer Account Transfer Section, Inc. A Section of SIFMA - 20
Seminar Break
Seminar will resume in 15 minutes
412 Customer Account Transfer Section, Inc. A Section of SIFMA - 21
Cost Basis Working Group Discussions
Ellen Bocina – Fidelity
Lydia Midwood – DTCC
Kelle Hennier – DST Systems
Derek Yen – Edward Jones
412 Customer Account Transfer Section, Inc. A Section of SIFMA - 22
2005 20102009200820072006
Cost Basis Reporting . . . A Long Cost Basis Reporting . . . A Long JourneyJourney
Various versions of Draft Legislation
Comment Period Proposed Regs36 Q’S
Industry Dialog with GAO, Senate Finance, Joint Committee on Taxation and Treasury
Comment Period
20122011
Final Legislation to Implementation
2013
Options, Fixed Income
Stock
Mutual Funds
412 Customer Account Transfer Section, Inc. A Section of SIFMA - 23
NovemberOctoberSeptember
Time… There’s Never Enough of Time… There’s Never Enough of ItIt
December
Development, Testing, Business Decisions, Communications, Training… 15 Weeks and Counting……………..
Testing: Systems, manual transfer statements, Monthly Statements; Confirmations…
Sign up for CBRS
Client Notification of default method
W-9 Solicitations for Corps.
Form Changes
Testing: CBRS
NICSA East Coast Regional Meeting, June 3, 2011, Sentry Centers, NYC 23
9 weeks to CBRS Changes13 weeks to systems freeze15 weeks to 1/1/2012
Testing: CBRS
Sign up for CBRS
Year-End Freeze
Production: CBRS
412 Customer Account Transfer Section, Inc. A Section of SIFMA - 24
2011 Deliverables2011 Deliverables Identification of S Corporations vs. C Corporations
S Corporations (other than financial institutions)
Final IRS Form W-9 (Rev. January 2011) issued January 31, 2011
Supplemental Information - Reconciliation with the breakdown of lots on 1099-B
Box 1b: requires the date of acquisition (allows for combining non-covered, short-term covered and long-term covered lots)
Box 3: requires the reporting of cost or other basis of the security
Box 5: requires the reporting of disallowed wash sale losses
Box 6: requires notification if the security is uncovered
Box 7: requires reporting of the amount of the gain or loss
Box 8: requires identification of the gain or loss as short-term or long-term
412 Customer Account Transfer Section, Inc. A Section of SIFMA - 25
Transfers – Relief ends 12/31/2011Transfers – Relief ends 12/31/2011
Matching
Manual statements
Corrections
Gifted / Inherited
Transfer Reversals
FRVs
RCLs
Other
Conversions
Third Party Transfers
File Changes
Mutual Fund Transfers – Fund/Firm and Firm/Firm
PTFs
Networking
Manual
Reversals
Industry Testing
412 Customer Account Transfer Section, Inc. A Section of SIFMA - 26
2012 Transfer Statement Reporting
Transfer statement reporting will be required for shares eligible for average cost beginning in 2012
The majority, but not all, transfer reporting will occur through Depository Trust & Clearing Corporation (DTCC) cost basis reporting service (CBRS)
Joining CBRS service is not automatic Testing/validation will be required before 2012 Challenges are expected with non-CBRS transfers
Missing transfer statements Important for advisors and investment professionals to understand the
process Mandatory and optional requests for missing transfer statements
Transitional penalty relief for 2012 transfer statement reporting? Not currently expected
412 Customer Account Transfer Section, Inc. A Section of SIFMA - 27
CBRS StatisticsCBRS Statistics
Firm Type Signed Up In Production
Brokers 99 71
Banks 32 20
Funds 54 0
Equity Transfer Agents/Issuers
74 34
Out of 54 Fund Companies:•70% expect to be in Production on 12/09/2011 or earlier•30% expect to be in Production on 01/02/2012
On average, 3% of CBRS records are system rejected, 2% are firm rejected
412 Customer Account Transfer Section, Inc. A Section of SIFMA - 28
This year’s CBRS enhancementsThis year’s CBRS enhancements
Excel upload on WebDirect implemented in JuneExcel upload on WebDirect implemented in June Mutual fund enhancementsMutual fund enhancements
New requirements: Current Cost, Alternate Control New requirements: Current Cost, Alternate Control Number, Customer Account NumbersNumber, Customer Account Numbers
Exempt recipient accounts indicatorExempt recipient accounts indicator
System improvementsSystem improvements Remove ACATS editsRemove ACATS edits Removed Cost fields from Asset Input recordRemoved Cost fields from Asset Input record Changed some field names (e.g. Receiving Firm is now Changed some field names (e.g. Receiving Firm is now
Contra Firm)Contra Firm)
412 Customer Account Transfer Section, Inc. A Section of SIFMA - 29
CBRS ResourcesCBRS Resources
http://www.dtcc.com/products/cs/equities_clearance/http://www.dtcc.com/products/cs/equities_clearance/cbrs.phpcbrs.php
User Guide, FAQs, Record layouts, Important User Guide, FAQs, Record layouts, Important NoticesNotices
CBRS Working GroupCBRS Working Group Internet-based training available later in 2011Internet-based training available later in 2011
412 Customer Account Transfer Section, Inc. A Section of SIFMA - 30
Mutual Fund Cost BasisMutual Fund Cost Basis
Investment Company Institute (ICI)Investment Company Institute (ICI) Tax CommitteeTax Committee TA Advisory (TAAC)TA Advisory (TAAC) Broker-Dealer Advisory (BDAC)Broker-Dealer Advisory (BDAC)
BDAC CBR Task Force ActivitiesBDAC CBR Task Force Activities Lot DepletionLot Depletion ACATS-Fund/SERV, Networking, ManualACATS-Fund/SERV, Networking, Manual Best Practices / DocumentationBest Practices / Documentation
CBRS Steering CommitteeCBRS Steering Committee
SIFMA CAT Cost Basis Sub-CommitteeSIFMA CAT Cost Basis Sub-Committee
412 Customer Account Transfer Section, Inc. A Section of SIFMA - 31
Mutual Fund Cost Basis – Firm/Fund Mutual Fund Cost Basis – Firm/Fund Transfers PTFTransfers PTF
ACATS PTF Push High Level Process Flow:
Dealer Firm (Deliverer)
Initiator
Dealer Firm (Deliverer)
Initiator
NSCC ACATS(DTCC)
NSCC ACATS(DTCC)
NSCC Fund/SERV(DTCC)
NSCC Fund/SERV(DTCC)
Fund Company(Deliverer)
Fund Company(Deliverer)
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - DAY 1 - - - - - - - - - - - - - - - - - - - - - - - - - - -
Submits ACATS PTF
Creates Fund Registration
Transmits 018 Record to Fund
Company
Processes the 018 Record
Submits the 019 Record
to Fund/SERV
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - DAY 2 - 3 - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
Sends 019 Record to
ACATS
Receives 019 Record and
Creates ACATS
Fund/SERV Stat File
ACATS Transfer
Status Ages to Settle Close
EOD
CBRS Record is Uploaded
DTCC Sends the CBRS Record to Fund Company
DTCC Receives the CBRS Record
from Firm
Submits the CBRS Record to
DTCC After PTF is Acknowledged
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - DAY 3 -18 - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
CBRS
CBRS
CBRS
CBRS
412 Customer Account Transfer Section, Inc. A Section of SIFMA - 32
Mutual Fund Cost Basis – Fund/Firm Mutual Fund Cost Basis – Fund/Firm Transfers NetworkingTransfers Networking
Day 1
Day 2-4
412 Customer Account Transfer Section, Inc. A Section of SIFMA - 33
Mutual Fund Cost Basis – Fund/Firm Mutual Fund Cost Basis – Fund/Firm Transfers ManualTransfers Manual
412 Customer Account Transfer Section, Inc. A Section of SIFMA - 34
Questions?
412 Customer Account Transfer Section, Inc. A Section of SIFMA - 35
Lunch BreakReminder
Lunch break Seminar will resume in 45 minutes
412 Customer Account Transfer Section, Inc. A Section of SIFMA - 36
Resume Resume Cost Basis DiscussionCost Basis Discussion
412 Customer Account Transfer Section, Inc. A Section of SIFMA - 37
Mutual Fund Cost BasisMutual Fund Cost Basis
ACATACAT Cost basis will transfer as it does today. Cost basis will transfer as it does today.
Non-ACATNon-ACAT Cost basis may not transfer today - no agreement on TCN or other Cost basis may not transfer today - no agreement on TCN or other
matching criteria. The pertinent detail may be on the mutual fund matching criteria. The pertinent detail may be on the mutual fund acknowledgement files:acknowledgement files:
Networking – F53 Transaction Type 2Networking – F53 Transaction Type 2 Manual – F55 Transaction Type 13Manual – F55 Transaction Type 13 "Manual Manual" "Manual Manual"
Firm/Firm Transfers for Mutual Firm/Firm Transfers for Mutual FundsFunds
412 Customer Account Transfer Section, Inc. A Section of SIFMA - 38
Other Mutual Fund ConsiderationsOther Mutual Fund Considerations
Manual paperwork from the receiving firm to the Manual paperwork from the receiving firm to the delivering firm and logs / re-registration letters to the fund delivering firm and logs / re-registration letters to the fund needs to include needs to include
Revocation – sale, transfer or disposition– What Revocation – sale, transfer or disposition– What constitutes a transfer or disposition?constitutes a transfer or disposition?
TransfersTransfers Gifting in an average cost accountGifting in an average cost account Exempt Recipient Account Indicator on CBRS Master FileExempt Recipient Account Indicator on CBRS Master File Mutual Fund Transfer Reversals (code 33 and 34 on F55)Mutual Fund Transfer Reversals (code 33 and 34 on F55) Delivering firm on an ACAT loading Level 4 Mutual Fund Delivering firm on an ACAT loading Level 4 Mutual Fund
assetsassets Receiving firm on an ACAT default registration of Level 0 Receiving firm on an ACAT default registration of Level 0
or 4 Mutual Fund assetsor 4 Mutual Fund assets
412 Customer Account Transfer Section, Inc. A Section of SIFMA - 39
Mutual Fund Cost Basis – Next Steps Mutual Fund Cost Basis – Next Steps
Fund Default ElectionsFund Default Elections CBR for Mutual Funds – DTCC Supplemental GuidesCBR for Mutual Funds – DTCC Supplemental Guides On boarding for Mutual FundsOn boarding for Mutual Funds
Complete DevelopmentComplete Development TestingTesting
Operational preparations for January, 2012Operational preparations for January, 2012 Important datesImportant dates
9/30 – CBRS Testing9/30 – CBRS Testing 11/18 – Production11/18 – Production 12/15 - Changes from IN 725612/15 - Changes from IN 7256 1/1/2012 – Penalty relief expires1/1/2012 – Penalty relief expires
412 Customer Account Transfer Section, Inc. A Section of SIFMA - 40
Vision Concepts
412 Customer Account Transfer Section, Inc. A Section of SIFMA - 41
Other Cost Basis ConsiderationsOther Cost Basis Considerations
Inheritance -Inheritance - User CUSIPsUser CUSIPs Foreign CUSIPsForeign CUSIPs TestingTesting Inherited/gifted shares to multiple Inherited/gifted shares to multiple
individuals – s/b pro-rata.individuals – s/b pro-rata. Working Exception Reports and Manual Working Exception Reports and Manual
Transfer StatementsTransfer Statements
412 Customer Account Transfer Section, Inc. A Section of SIFMA - 42
Parking LotParking Lot
Mutual FundsMutual Funds F53 is currently sent to the submitting firm onlyF53 is currently sent to the submitting firm only Timing of CBRS records on PTF transfers and the need for a PEND Timing of CBRS records on PTF transfers and the need for a PEND
Process by the Firms or a Delay of 1 day by the Funds for CBRSProcess by the Firms or a Delay of 1 day by the Funds for CBRS Consistency of transaction types by Fund Companies on the F55Consistency of transaction types by Fund Companies on the F55 Industry consistency for "Manual Manual" Mutual Fund TransfersIndustry consistency for "Manual Manual" Mutual Fund Transfers
CBRSCBRS Add Cost field rules for fixed income assetsAdd Cost field rules for fixed income assets Edits to Exempt Recipient Accounts indicatorEdits to Exempt Recipient Accounts indicator Develop a universal format for the Transfer Control NumberDevelop a universal format for the Transfer Control Number Define how to use “Other Depository Deliveries” and “Physical Define how to use “Other Depository Deliveries” and “Physical
Movement Settlement” transaction typesMovement Settlement” transaction types Define how to use User CUSIPsDefine how to use User CUSIPs
412 Customer Account Transfer Section, Inc. A Section of SIFMA - 43
What Will Confuse Your Customers
No lot selection after settlement date (cutoff) Covered versus non-covered securities (ETFs and UITs) New rules on the average Cost election (DRP covered vs
non-covered) Frustration about wash sales disallowance reporting Additional burdens for gifted and inherited shares Three-year and 18-month cutoffs for corrected 1099-Bs and
transfer statements.
Account defaults for lot depletion New Forms
412 Customer Account Transfer Section, Inc. A Section of SIFMA - 44
Special Rules: Inherited and Gifted
Transfer statement must indicate that the transfer consists of an inherited security
Statement must report the date of death as the original acquisition date and the adjusted basis according to instructions or values provided by an authorized representative of the estate
If authorized representative of the estate does not provide the instructions or valuations regarding basis, the broker must report values if readily ascertainable
If values are not readily ascertainable, the transferor must indicate that the security is inherited but can otherwise report it as a noncovered security
Transfer statement must indicate that the transfer consists of a gift, report the date of the gift and include the adjusted basis, acquisition date and holding period of the donor
Statement must also report the fair market value of the security on the date of the gift (if known)
If the securities are subsequently transferred to a different account of the same owner, the additional gift related information set forth above must be included
If a transfer affects a “change of ownership,” the transfer must be reported as a gift (and the required information obtained, if available) unless the transfer is between persons for whom gift-related basis adjustments are inapplicable—transferor will need to know WHY
Gifted mutual fund and DRP shares received may not be average eligible
Inherited Securities Gifted Securities
412 Customer Account Transfer Section, Inc. A Section of SIFMA - 45
Education, Communication and Education, Communication and Support Support
InternalBranchClient
Educational Tools Policies and Procedures Training Guides Webinars Round Tables White Papers Best Practice Documents
Support Needs Phone Calls Service Requests Self Service Tools Policies and Procedures Data Mining and Rejects Staffing Requirements
412 Customer Account Transfer Section, Inc. A Section of SIFMA - 46
Open Issues DiscussionOpen Issues Discussion
What Have We Missed?What Have We Missed?
412 Customer Account Transfer Section, Inc. A Section of SIFMA - 47
20132013
TO BE CONTINUED……TO BE CONTINUED……
412 Customer Account Transfer Section, Inc. A Section of SIFMA - 48
Questions?