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Celebrating 25 years of Growth with Mutual Fund Profile Security

By DTCC Connection Staff | 4 minute read | August 30, 2023

In 1998, DTCC’s Mutual Fund Services launched its Mutual Fund Profile Service II- Profile Security (MFPS II), a database of prospectuses, operational processing rules and distribution data for mutual funds securities. At the time, no one could have predicted that it would evolve into a sophisticated, multi-dimensional repository of more than 7.5 million data points.

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“Twenty-five years ago, there was no centralized repository for this data to be stored and easily viewed, nor was there standardization or structure for such data to be shared,” said Josephine Torelli, DTCC Executive Director. “Looking back on the advancements made to the Profile service, it is truly remarkable how risks have been mitigated through the efficiencies developed with this service.”

Building an Industry Standard

Before DTCC introduced the service, the mutual funds landscape faced significant challenges within its investor community network. Firms were required to manually research information about mutual funds to identify suitability requirements – a necessary yet time-consuming exercise.

“There was no standardized format or structure for this information, which may have resulted in sales load charge inconsistencies, such as Letter of Intent (LOI) and Rights of Accumulation (ROA), and potentially missed opportunities for the underlying investor,” said Sharon Wilner, DTCC Product Management Director.

In 2003, a joint industry task force, chaired by the National Association of Securities Dealers (NASD), determined DTCC’s Profile Security could be expanded to solve the challenge for storing and delivering breakpoint data, fees, and other operational data points.

“It turned out that we had already built the almost-perfect platform to solve this problem,” said Wilner. “We were able to expand the capabilities of Profile Security to provide the industry with a standardized, streamlined way to retrieve information for broker/dealers and other distribution firms.”

Adopting Innovative Technologies

Advances in cognitive technology and data mining dramatically changed the landscape and triggered further system upgrades in 2012 that automated the extraction of data from prospectuses and other documents filed with the SEC’s EDGAR system. Clients reaped tremendous benefits when the business automated the data sourcing and as the speed, accuracy and capacity of data technology continued to improve, the business began exploring additional efficiency gains for the next stage of enhancements.

Related: View 25 Years of MFPS II Progress

DTCC has steadily been harnessing advanced technology to further support the mutual fund industry, thus reducing the burdens of data management and elevating the quality of data for clients. Additional notable upgrades include the extensive use of Text Analytics and Natural Language Rules as well as Inline eXtensible Business Reporting Language (iXBRL) links contained within filed documents, all of which maximize the efficiency and integrity of sourced and extracted data. Utilizing the millions of data points in Profile Security to automate the completion and delivery of these reports is helping save clients time and reducing manual data-entry errors.

“We continue to adopt innovative technologies and these enhancements represent a huge leap forward for our clients in terms of simplifying and accelerating extraction of the overwhelming volume of data from mutual fund prospectuses and other regulatory documents.” said Peter Reist, DTCC Senior Associate, Product Management.

A Quarter Century of Progress

With the help of the ICI’s Profile Steering committee and other industry partners, Profile Security continues to gain adoption, doubling the number of Fund clients over the last two years alone. There are currently more than 500 asset managers and intermediaries combined utilizing the service, covering more than 29,000 security issue IDs, with over7.5 million data points in the repository.

On Profile Security’s 25th anniversary, DTCC reflects on the many groundbreaking advancements Profile Security has brought to the industry, including:

  • automation of sourced data from prospectuses and other filed documents;
  • systemic generation of specification reports populated from existing data;
  • the opportunity to periodically review and acknowledge Not-in-Document (NID) datapoints - operational data points not typically found in regulatory documents, thus instilling even greater confidence in the data;
  • the ability for clients to extract key data points to compare, review, and process changes or correct data entry discrepancies and reduce risk caused by manual input.

“We congratulate DTCC’s Profile Security service on a quarter century of progress and positive impact for the Mutual Fund industry,” said Jeff Naylor, Chief of Industry Operations at ICI. “This service has been valuable to ICI’s mission of supporting the asset management industry, and we look forward to working with DTCC in advancing efficient and secure delivery of investment information to benefit the long-term individual investor.”

Looking Toward the Future

Future planned developments to the Profile Security Service are anticipated to include an expansion of product types, continued integration with MF Info Xchange and exploration of improved data delivery options. Additionally, users will realize a reduction in manual entry when intermediaries request the creation of new fund launch reports and annual reviews through specification reports.

“The mutual fund landscape has evolved significantly in the past 25 years, and I am very proud of how DTCC has contributed to this growth while reducing risk and expanding capabilities through modernization,” said Torelli. “We are looking forward to exploring additional opportunities with our clients for enhancements to our service offerings.”