Last year began well enough. But in September, as the first shock waves hit, scandals were revealed and other problems within the fund industry became front-page news, the year turned somber. Investigations escalated, and the U.S. Senate Banking Committee trained its eye on the unfolding chronicle of late-trading and market-timing abuses, launching a series of information hearings with every sector of the industry.
When the Securities and Exchange Commission, in its proposal to amend Rule 22c-1 on forward pricing, cited National Securities Clearing Corp. (NSCC) and its Fund/SERV system as a possible solution, the Committee sought us out. Processing a peak volume last year of 87 million transactions valued at $1.5 trillion for more than a thousand fund companies and intermediary firms, the Committee wanted to know how this operational engine could play a role in solving the problems of late trading and market timing.