MAS Capabilities to Include Dual Contracts

Michelle Curley, senior vice president and senior implementation manager, Citi GTS

DTCC’s Wealth Management Services unit is extending the capabilities of its Managed Accounts Service (MAS) to include another type of product: the dual contract. MAS, an offering of DTCC Solutions LLC, provides a single gateway for sponsors, investment managers (IMs) and service providers to exchange information. Automated, standardized features streamline account initiations, account maintenance and client profile updates throughout the life cycle of a managed account.

“DTCC’s dual-contract straight-through processing initiative is a positive move for the industry, as it facilitates portability, helps managers maintain client and advisor relationships between broker/dealers, and supports sponsor firms in their recruiting efforts,” said Michelle Curley, senior vice president and senior implementation manager, Citi GTS. “Converting highly manual tasks to electronic messaging and eliminating point-to-point communications and document processing will make it easier for customers, as well, since investing their money can begin almost immediately.”

“As the popularity of dual contracts grows, the industry naturally wants to avoid the types of operational complications that arose with the rapid expansion of separately managed accounts,” said Ann Bergin, DTCC managing director and general manager, Wealth Management Services. “By leveraging our MAS platform, we’ll be able to address processing bottlenecks quickly.”

Single vs. Dual

In today’s environment, most sponsors maintain both single-contract and dual-contract accounts. In a single contract, the sponsor typically provides a level of research and due diligence on IMs and often stands as a co-fiduciary with the IM. Customers execute one contract with the sponsor.

Dual contracts require a customer to execute two separate contracts: one covering services provided by the sponsor; and the other covering separate services provided by the IM. One example where a dual contract would be required is when a customer desires access to an IM that does not have a relationship with a sponsor.

Solutions to the problem

According to David Gardner of Smart Consulting, the most important issues facing the dual-contract industry include:

• technical inefficiencies and the need to develop standards around the message formats developed by The Money Management Institute (MMI) to streamline account openings and maintenance;
• process and paper-flow inefficiencies related to handling applications;
• regulatory and compliance rules that will require firms to adopt new electronic message flows and more streamlined processes.

With industry input, DTCC has begun to develop the business requirements for dual-contract message development that will address these three areas.