The Alternative Investment Product (AIP) suite of services is a platform that links global market participants — including broker/dealers, fund managers, administrators and custodians — to provide end-to-end processing of alternative investments such as hedge funds, funds of funds, private equity, non-traded real estate investment trusts (REITs) and limited partnerships.

Overview

The Alternative Investment Product (AIP) suite of services is a platform that links global market participants — including broker/dealers, fund managers, administrators and custodians — to provide end-to-end processing of alternative investments such as hedge funds, funds of funds, private equity, non-traded real estate investment trusts (REITs) and limited partnerships.

AIP is intended to standardize the way the alternative investment industry communicates information about the security and the associated investments. By effectively addressing the manual, risky operational issues that challenge customers, AIP will help the alternative investment community become more scalable through increased efficiencies, reduced operational risk and lowered costs.

Created with the collaboration of industry leaders and modeled after the enormous success of DTCC’s Mutual Fund Services, AIP has the potential to similarly transform the business of alternate and direct investments

The AIP suite of services supports the following:

• Fund profiles, including offering and redemption periods, holdbacks, payment instructions, and more
• Initial and subsequent subscriptions
• Redemptions/tender offers
• Exchanges
• Position reporting
• Valuation and price reporting
• Activity and distribution reporting and settlement
• Account maintenance
• Payments, including commissions and distributions

The services are accessible through XML, mainframe file transfer or CSV spreadsheet uploads.

Who Can Use This Service

The AIP suite of services is open to participants in the alternative investment space, including current users of NSCC’s Mutual Fund Services, SEC-registered advisors, CFTC registered commodity pool operators, trading advisors, SEC registered investment companies, broker/dealers, banks and trusts.

U.S. and non-U.S.-based firms are eligible for membership. Participants must sign an AIP membership agreement and appoint an NSCC settling bank.

Benefits

For a growing industry that today relies largely on manual processing, NSCC's service offers a number of key benefits:

Improves client service

• Increases efficiency through automation and standardization of transactions between firms and funds.
• Eliminates the need for fax, email, and phone calls for order processing.
• Lowers risk of errors with automated information management that minimizes duplication and eliminates gaps in information.
• Disseminates position and valuation reports without the need to manually track and manage information in each account.
• Streamlines reconciliation between counterparties, providing an accurate picture of a client's account at any given time.

Enhances functionality and reconciliation

• Global capabilities include settlement reporting in multiple currencies.
• A proven network maintains an audit trail of all data to streamline information management and reconciliation.
• Automated, straight-through-processes increase speed of settlement and eliminate delays and redundant paperwork in reconciling transactions.

Provides data integrity and security

• Centralizes data exchange over a secure and reliable telecom network with unparalleled business continuity capabilities.
• Offers improved capacity for data and trend analysis, management reports and compliance reviews through a robust, automated data environment.

How the Service Works

Firms can initiate the transmission of:

• Financial trade data and customers’ registration information
• Purchases and redemptions/tender-offer transactions
• The transfer of shares and monies within the same fund family

Funds can initiate the transmission of:

• Fund profile information
• Redemption and tender-offer transactions
• Commission and fee reporting, including settlement
• Payment information and cash related activities
• Position and performance information on a monthly, weekly or daily basis
• Actual or estimated net asset values for individual securities within a fund family
• The transfer of shares and monies within the same fund family

Participant Numbers and Settlement:

All members need separate participant numbers for the AIP service. However, all NSCC settlement banking and account requirements remain the same. Settlement obligations for alternative investments will not be netted with other NSCC activity. AIP activity will be settled gross, with debits settled separately from credits.

For More Information

Please contact DTCC Relationship Management at (212) 855-8877.