Direct accounts are fund accounts held in an investor's name at a fund company. Sometimes, investors also use a broker/dealer or other distributor for additional fund investments. If the distributor, who is called the "broker of record," is not aware of the customer's direct accounts with the fund company, those investments will not be reflected on his or her books and records.
"The lack of information at the distributor level has made it difficult to accurately calculate breakpoints on these accounts," said Ann Bergin, managing director, Mutual Fund Services for DTCC. "We've been able to enhance the functionality of our Networking service so that fund companies can use this system to provide distributors with additional information that will allow them to better comply with regulatory requirements. As a result, a customer's direct accounts can be linked with their other fund accounts, and full breakpoints can be applied."
In addition to receiving information on a customer's direct account, via Networking, distributor firms can also receive files that show the closing balance of each direct account on a specific date, and any dividend and capital gain information.
