Fund Transfers: A New Compliance-Ready Solution Goes Live
The first in a series of web services solutions from DTCC Insurance & Retirement Services is now in full production. Fund Transfers (FTR) automates and standardizes the fund reallocation process within a variable insurance product. With this compliance-ready solution, distributors can capture, monitor, and supervise representative-initiated fund transfer transactions and comply with state and federal regulatory requirements.
“Fund Transfers brings greater efficiency and transparency to a process that has raised concerns from regulators regarding supervision requirements in broker-initiated transfers of funds,” said Adam Bryan, general manager, DTCC Insurance & Retirement Services. “This important addition to our suite of services reduces the risk of unmonitored transactions and the monetary penalties that can follow regulatory violations.”
The new product, which migrated from pilot phase to full production in August 2008, represents Insurance & Retirement Services’ inaugural offering in a web services platform rather than the traditional, mainframe environment of its fixed format core services. It is also the first of several products being developed based on the ACORD (Association for Cooperative Operations Research and Development) messaging standards and using XML (Extensible Markup Language).
Background of Fund Transfers
This compliance solution grew out of a SIFMA (Securities Industry and Financial Markets Association) advocacy paper that urged the industry to develop a standardized, centralized process that would provide a window of transparency into these fund transactions and to leverage the technology already established by DTCC.
The rigorous pilot testing of Fund Transfers, which began in October 2007, broke new ground for DTCC Insurance & Retirement Services, resolving issues of web connectivity and developing a new product within a real time environment and new data format. Each pilot initiative combines the efforts of the DTCC project team and the firms that volunteer to participate in the project, including carriers Genworth Financial, ING and Pacific Life, broker/dealers Merrill Lynch and Smith Barney, and solution provider Blue Frog.
“The pilot process not only has taken on every possible test scenario, it resolves larger issues of functionality that will benefit our collective efforts in future web products,” said Craig Gurien, director, Product Management, DTCC. “The lessons learned will help speed the development process for our next service, Attachments.”
Insurance & Retirement Services plans to introduce over the next 12 months two more web services solutions using XML data messaging: Attachments and Replacements.
The Fund Transfers Process
Fund Transfers (FTR) enables Distributors and Insurance Carriers to perform fund transfers electronically in real-time using their proprietary or vendor supported platform. It involves two distinct transactions:
- Values Inquiry enables Distributors to request and receive from Carriers the most current contract information prior to submitting a fund transfer request.
- Fund Transfer automates a direct exchange or one-time reallocation of the underlying funds within a variable insurance asset.