存 continues to provide broad support for the changing needs of the mutual fund industry, with the announcement of recent service enhancements to its 基金/服务® product to now process future-dated interval fund repurchase orders.
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Interval funds are different from traditional closed-end funds because their shares typically do not trade on the secondary market. 分享s are periodically offered to 股东 during specified periods, known as repurchase periods. Repurchase orders must be received during the repurchase period, which commences prior to the trade date.
“Because of the unique operating characteristics of interval funds, intermediaries were unable to submit repurchase orders through 基金/服务 prior to the trade date, and in many cases would warehouse and track repurchase requests manually on their books until the end of the repurchase period,约翰·萨克森尼安说, 据导演, 互惠基金服务. “This limitation carried the significant operational risk with holding these orders rather than delivering them when received, including the risk that the intermediary holding the order could fail to submit it during the repurchase period. 同样的, Funds need to be informed of repurchase orders as soon as possible, to help them understand liquidity demands and anticipate if they may need to prorate repurchase activity.”
These challenges were further compounded with the continued growth of interval fund offerings, placing stress on current industry capabilities to support interval fund processing efficiently and effectively.
To address this challenge, the Broker Dealer Advisory Committee of the Investment Company Institute (ICI) and 存 formed a Task Force to define 基金/服务 enhancements to support interval fund repurchase orders with a future trade date. The enhancements to 基金/服务 were implemented by 存 in March, and provided:
- Intermediaries the ability to submit a repurchase order with a future trade date.
- Funds the ability to acknowledge future dated repurchase orders, which provides intermediaries with the confidence their transaction has been received by the Fund.
- A “de-minimis repurchase waiver code” field to allow intermediaries to indicate the repurchase order is eligible for de-minimis treatment in the event of proration, in accordance with the Fund’s prospectus.
- A new Security Type to identify an interval fund.
In coordination with the 基金/服务 enhancements, the Mutual Fund Profile Security service was also enhanced to add a new Product Type Code to identify an interval fund.
“It’s a great benefit to Funds, 股东, and intermediaries to improve the straight-through processing capabilities for interval fund repurchases through 基金/服务,约瑟芬·托雷利说, 存执行董事, 互惠基金服务. “It’s difficult to imagine our industry without 基金/服务, which continues to set the gold standard for processing and settling increasingly complex investment product transactions.”
Details of the enhancements were documented in NSCC’s 重要通知a9044. The ICI-存 Task Force also published a User Guide/Best Practices document covering the enhancements and use of the MF信息交换 service for Funds to communicate interval fund repurchase events.