The National Securities Clearing Corp. is in the initial stages of creating an offshoot that will service independent financial advisors. The new arm plans to computerize mutual fund processing for these independent planners who still do fund processing by mail. The venture is so new, however, a name has not yet been decided upon. The NSCC board of directors approved the creation of the new group in December.
"We're still in the early stages of this," said Stuart Goldstein, an NSCC spokesperson. The NSCC, a not-for-profit company owned by the New York and American stock exchanges and the NASD, currently clears and settles a majority of the mutual fund trades in the U.S. Its Fund/SERV system currently allows financial services companies to process mutual fund purchases and redemptions through automated connections with mutual fund companies.
Independent financial planners however are not serviced through this system. But, they are becoming an ever more important market for mutual funds and these fund companies do not want to alienate them.
"The decision recognizes this segment of the industry has such unique requirements - and is so manually intensive - that if the processes are not computerized, it would become a greater strain on the processing resources of funds and the brokerage firms that contract businesses with financial planners," the NSCC wrote in its 1998 annual report. NSCC participants should receive the report this week.
The mutual fund industry is expected to pay for the new enterprise. But the NSCC is expected to make a minority investment in the new business, according to an NSCC spokesperson.