The Depository Trust and Clearing Corp. has enhanced its mutual fund services to include 529 college savings plan information in a streamlined manner for broker/dealers and other financial distributors. New functionality has been added to the transactional hub Fund/SERVE and to network account reconciliation.
Since 529 plans are classified as municipal securities, each individual state has its own program requirements and different administrative methods, which heretofore resulted in high administrative and processing costs. DTCC’s changes now permit transactions to capture such additional information as the beneficiary’s social security number and address, cost-basis accounting and earnings-to-date in dollar amounts.
DTCC’s subsidiary, National Securities Clearing Corp., “has an extensive track record of offering valuable services to the mutual fund market for nearly 30 years, and the efficiencies built into our services have been instrumental in the growth of that market to over $12 trillion,” said Ann Bergin, managing director and general manager of DTCC wealth management services. “This is an opportunity for us to expand our services to help yet another segment of the funds market, especially at a time when assets are coming back and growth prospects are strong.” After hitting a peak of $112 billion in 2007, 529 assets were back to $111.1 billion at the end of the third quarter of 2009, according to Financial Research Corp.
“For broker/dealers and sponsors of 529 plan programs, this new technology paves the way for a more efficient processing environment,” said Lisa M. Klassen, group leader at Edward Jones who worked with the NSCC to develop the enhancements.
“There is a great deal of specific information that needs to be communicated between parties, and until now, that’s been done via phone and fax,” said Klassen, a member of the Investment Company Institute’s Bank/Trust Advisory Committee. "NSCC’s ability to create a standardized and automated alternative streamlines that process.”
The new system will enable B/Ds to hold 529 plan accounts on their own platforms, rather than at mutual fund transfer agents, and to provide transparent information to regulators, noted Kathy Joaquin, director of operations and distribution at the ICI.