Joint ICI/NAVA Working Group finalizes best practices for compliance with SEC redemption fee rule (Rule 22c-2)

 

 

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July 9, 2007

TO: BANK, TRUST AND RECORDKEEPER ADVISORY COMMITTEE No. 18-07
BROKER/DEALER ADVISORY COMMITTEE No. 31-07
OPERATIONS COMMITTEE No. 13-07
SMALL FUNDS COMMITTEE No. 26-07
TECHNOLOGY ADVISORY COMMITTEE No. 19-07
TRANSFER AGENT ADVISORY COMMITTEE No. 40-07 RE: JOINT ICI/NAVA WORKING GROUP FINALIZES BEST PRACTICES FOR COMPLIANCE WITH SEC REDEMPTION FEE RULE (RULE 22C-2)

 

Last October a working group, co-sponsored by the ICI and NAVA, was formed to address the data sharing requirements of the SEC Redemption Fee Rule (Rule 22c-2) for variable annuities.  The working group has completed amendments to a best practices document issued last year in conjunction with DTCC’s Standardized Data Reporting (SDR) functionality.  SDR provides a mechanism for intermediaries that are NSCC participants to provide funds shareholder-trading data in standardized formats for market timing monitoring as required under the rule. [1]  The document has been amended to address characteristics that are unique for processing variable annuities.  DTCC has also enhanced SDR functionality to include new fields and codes to support data sharing for variable annuities (see DTCC’s Important Notice Release A#6446, P&S #6016 located on the NSCC website at http://funds.dtcc.com/media/impntc/index8891.html).

Although the best practices document was completed in conjunction with the SDR functionality, it was amended to provide a standard foundation from which mutual funds and insurance carriers may exchange data.  Utilizing this foundation provides both mutual funds and insurance carriers an efficient baseline to manage the data sharing requirements.

The ICI and NAVA will be hosting an industry call for mutual funds, insurance carriers, and service providers on Tuesday, July 17th from 2:00 to 3:30 pm ET to discuss the best practices and the enhancements to SDR.  Representatives from ICI, NAVA, DTCC, mutual fund companies, and insurance carriers will discuss the variable annuity specific best practices and related SDR functionality and address questions from call participants regarding the practical application of those best practices.  The dial in number for the call is 1-888-769-9729 pass code 26140.

Questions regarding this initiative may be directed to the undersigned (202-326-5980 or mburns@ici.org).

 

Martin A. Burns
Director – Institutional Operations & Distribution

endnotes

 [1] See Institute Memorandum No. 19829, dated March 13, 2006, Rule 22c-2 Sample Mutual Fund Agreement Package for Intermediaries and DTCC Important Notice on Standardized Data Reporting Service.