Recordkeeping systems and short term redemption fees

[Demosthenes]

Coming soon to a Transfer Agent, Clearing Broker, or Fund Complex near you, restrictions on accounts with short term trading fees.

At least one fund complex and one clearing broker will be shutting off trading ability unless TPA's with omnibus accounts certify that they can track, collect, and remit short term trading fees. Latest date I've heard is end of the year but it could be sooner for some Fund complexes

I define omnibus accounts as one account/plan or one account for the business as opposed to individual accounts for each participant.

What I have not heard is when the major vendors of recordkeeping systems plan to deliver functionality for short term redemption fees. I'm interested in hearing from people working on the Schwab RT, OmniPlan, Wystar, and Relius platforms. Have you heard anything from your vendor?

[ljr]

It is my understanding Relius will have programming in place for the 1/1/05 deadline.

[TBob]

I understand that Schwab RT has enhanced their system to be able to track the STRF at the participant level. I still have some questions about how the flow of $$ will work with the fund companies but I need to do some more reading. Sounds like they may be a little ahead of the game.

I have a question for the Conversion Guru's out there and for those of you who are selling your TPA/RK services. It is standard practice in our shop when a plan is converting in to our system to map their funds to like investments until we receive the participant breakdown from the prior TPA. This has been considered preferable to putting the entire plan in a MM fund and exposing the plan to market risk while the prior TPA takes their time sending the final ppt accounting.

Once we receive the participant breakdown (which can take a couple days to several weeks) we set up the participants account balances, allocate any earnings from the conversion period and then realign the participants accounts to their new investment elections. This is all communicated to the participants and they sign new election forms indicating their elections and the fact that they want their entire account balance realigned after the conversion.

This is where the STRF comes into play. When we realign the entire plan after the conversion, we are selling out some big positions that were only held for a couple of days/weeks and are getting hit with some big fees. What are others doing at conversion time to avoid this if at all? Are your conversion processes different?

Sorry if I was too verbose but I wanted to be specific. Any advice appreciated. Anxiously awaiting some kind of legislation or guidance...