Fidelity Investments and the National Securities Clearing Corp. have partnered in a yearlong project to develop the technology to time-stamp mutual fund trades, The New York Times reports. The two giants are hoping that by time-stamping trade orders that come via outside intermediaries, only those orders made by the so-called hard 4 p.m. close will be allowed to get through thus eradicating illegal late trading once and for all. The Times characterizes this as a "time-stamped lockbox."
Also, a secondary goal of the nations No. 1 fund company and the trade-processing leader in the nation, is to keep the 4 p.m. deadline for a days orders, so as not to penalize the nations 95 million mutual fund shareholders. One of the solutions that has been presented in this mutual fund mess, and one that the Investment Company Institute has supported, has been moving the deadline for trade orders back 1-1/2 hours to 2:30 p.m.
Janice Morris-Hatch, a partner with Fidelitys venture capital division, Fidelity Ventures, has been put in charge of the new project, which she credits Fidelity Chairman Edward "Ned" C. Johnson III as floating. Ann Bergin, managing director at NSCCs counterpart, the Depository Trust & Clearing Corp., is the point person over at the NSCC / DTCC. Last February, Money Management Executive named Bergin winner of the 2003 Fund Operations Award for Leadership, presented by Thomson Media.
Commenting on Fidelitys partnership with NSCC, Morris-Hatch told the NYT: "They have the scale, the system, the links and the knowledge. So there was almost a prototype."
For his part, Fidelity Vice Chairman Robert Reynolds said, "It is the best way we can envision for the industry and regulators to minimize once and for all the chances of anyone beating the system by placing bets after the daily market race is run. Bergin applauded the new technology that will time-stamp trades from intermediaries including banks, brokers and retirement administrators as the best way of restoring investors, dealers and even funds trust.
