effective intermediary governance
TRANSCRIPT
EFFECTIVE INTERMEDIARY GOVERNANCE
EVOLVING BEST PRACTICES
NICSA Intermediary Discussion ForumSeptember 2012
EFFECTIVE INTERMEDIARY GOVERNANCE
Overview
• Mutual fund transfer agency operations have changed significantly in recent years as a result of the widespread adoption of omnibus accounts.
• Best practices for oversight of omnibus accounts maintained by broker-dealers are evolving.
EFFECTIVE INTERMEDIARY GOVERNANCE
The Changing Transfer Agency Paradigm
• Direct accounts
EFFECTIVE INTERMEDIARY GOVERNANCE
The Changing Transfer Agency Paradigm
• Direct accounts
• Networking accounts
EFFECTIVE INTERMEDIARY GOVERNANCE
The Changing Transfer Agency Paradigm
• Direct accounts
• Networking accounts
• Omnibus accounts
EFFECTIVE INTERMEDIARY GOVERNANCE
From Policies and Procedures to Governance
• From direct responsibility. . .
• To acting more indirectly
EFFECTIVE INTERMEDIARY GOVERNANCE
Omnibus Recordkeepers Must Demonstrate That They:
• Operate in an environment that makes it likely that they will fulfill their responsibilities.
• Have established adequate controls over the recordkeeping processes.
• Are complying with fund requirements.
EFFECTIVE INTERMEDIARY GOVERNANCE
Evolving Best Practices
1. Establish a working group assigned to intermediary governance
EFFECTIVE INTERMEDIARY GOVERNANCE
Evolving Best Practices
1. Establish a working group assigned to intermediary governance
2. Establish an oversight committee
EFFECTIVE INTERMEDIARY GOVERNANCE
Evolving Best Practices
1. Establish a working group assigned to intermediary governance
2. Establish an oversight committee
3. Develop a risk matrix or scorecard for evaluating omnibus intermediaries and recordkeepers
EFFECTIVE INTERMEDIARY GOVERNANCE
Evolving Best Practices
1. Establish a working group assigned to intermediary governance
2. Establish an oversight committee
3. Develop a risk matrix or scorecard for evaluating omnibus intermediaries and recordkeepers
4. Communicate early and often with fund boards
EFFECTIVE INTERMEDIARY GOVERNANCE
Evolving Best Practices
1. Establish a working group assigned to intermediary governance
2. Establish an oversight committee
3. Develop a risk matrix or scorecard for evaluating omnibus intermediaries and recordkeepers
4. Communicate early and often with fund boards
5. Use FICCA framework
EFFECTIVE INTERMEDIARY GOVERNANCE
Disclaimer
Although the observations and conclusions contained in this white paper represent the best thoughts of the individuals comprising the NICSA Intermediary Discussion Forum, they do not necessarily reflect the views of NICSA or any of its member organizations. Nothing herein is intended to be or should be construed as legal advice. You should contact your own counsel in order to obtain legal advice regarding these or any other matters.