by Christopher Manso

The industry’s push to automate managed accounts processing is picking up speed, as DTCC Solutions LLC prepares to launch its new Managed Accounts Service later this year. In July, the service expanded its customer base to include SEI and SunGard Transaction Network (STN), two major outsourcers in this rapidly growing market.

The Managed Accounts Service will bring much-needed efficiency to this industry segment, providing one central communications network and a standard set of messages. “Automating and standardizing the data flow among counterparties to these transactions will help our customers increase operational efficiencies, reduce trade-related costs and risk and stimulate growth, which ultimately benefits their investor clients,” said Ann Bergin, DTCC managing director and general manager, Wealth Management Services.

Initially, the service will support the opening and maintenance of accounts. In today’s environment, most of these messages are transmitted from the sponsoring broker/dealer to the asset manager who is hand-picked by the sponsor to invest and manage an investor’s funds.

Depending on the size and complexity of an investor’s account, more than a dozen asset managers can be communicating back and forth with a sponsor. And that’s for a single account.

“Multiply that by thousands of accounts, and the complexities of the communication between managers and sponsors can become a real burden,” said Bergin. “That’s the value of a single central communications platform. We transform a tangled web of communications into one streamlined process through a single gateway.”

New customers weigh in

Currently, account information that flows among investment managers, sponsors and service providers is exchanged by phone, fax and paper. The Managed Accounts Service will automate that communication, allowing a seamless flow of information to multiple trading parties through one connection to a central platform.

Mark Volker, SunGard

“SunGard is pleased to be participating with DTCC on this important initiative,” said Mark Volker, senior vice president for global strategy for the SunGard Transaction Network (STN). “STN has been a consistent proponent of open industry standards that support end-to-end trade automation, and we expect this initiative to help customers grow, streamline processing and mitigate risk.” Connectivity to DTCC will allow SunGard customers to seamlessly integrate with the Managed Accounts Service and facilitate rapid adoption of industry standards.

SEI anticipates similar benefits. “Our goal is to create and adopt innovations that will increase efficiencies and standardization for our SMA operations and our clients, and this service clearly falls in that category,” said Phil McCabe, managing director of SEI’s Investment Manager Services division.

Getting on board

Six investment management firms are working in a test environment, along with four outsourcers and nine vendors. And interest in the new service has accelerated following a June conference on managed account solutions sponsored by DTCC and the Money Management Institute. (See related article on this page.)

At that event, more than 130 sponsors, asset managers and vendors heard directly from early adopters, including those working in the MAS test environment. “Feedback we received from people at the conference made it clear they have moved beyond a wait-and-see approach to a commitment to use the service,” said Bergin.