Separately Managed Accounts Operations Communications and ...

Separately Managed Accounts Operations Communications and Data Standards

Operations and Technology Sub-Committee on Standards Money Management Institute Version 1.1 September 2002

Copyright © 2002 Money Management Institute. All Rights Reserved

Contents

EXECUTIVE SUMMARY: THE SEPARATELY MANAGED ACCOUNT BUSINESS DRIVE FOR STANDARDS----- 1

INTRODUCTION----------------------------------------------------------------------------------------------- 3

I. SEPARATELY MANAGED ACCOUNTS INDUSTRY----------------------------------------- 4

II. BUSINESS INTERACTIONS------------------------------------------------------------------------10

III. BUSINESS FLOW PROCESSES------------------------------------------------------------------17

IV. DATA FORMATS---------------------------------------------------------------------------------------24

V. TABLES---------------------------------------------------------------------------------------------------47

GLOSSARY----------------------------------------------------------------------------------------------------50

Copyright © 2002 Money Management Institute. All Rights Reserved 1

Executive Summary: The Separately Managed Account Business Drive for Standards

The current quest for standards in the separately managed accounts industry should be viewed in its historical context. Most of the Investment Managers who became involved in the business in its early stage of development were Institutional Asset Managers who were interested in expanding their product distribution to the retail networks of the major Broker Dealers.

The investment management business institutional operating model was the one most Investment Managers were familiar with. It depended on tri-party trade communications between broker-dealers, institutional Investment Managers and custodians. DTC was the industry utility for critical communications. The standard was electronic trade communications, interface, procedures and agreements (ad-hoc).

However, Institutional Managers were more accustomed to low volume levels of new accounts, terminations, external cash flows and client driven portfolio activity. They had primarily tax-exempt clients, highly customized reporting, sophisticated institutional consultants and distribution channels.

Separate Account Sponsors adopted the role of consultants in addition to their traditional roles as broker-dealers and custodians. There were no standard communications between Investment Managers and Sponsors. There was no industry utility. The all important account life cycle communications were delivered on paper, fax or electronically, depending on the Sponsor. In addition, many Sponsors required Investment Managers to use Sponsor specific trading and allocation generation platforms.

The Sponsors developed systems to accommodate multiple Investment Managers in multiple investment styles. Many spent considerable resources on trade entry, portfolio management and allocation generation platforms to support each of the Investment Managers. In many cases these systems were redundant to each other. They spent additional significant resources, collectively, on Manager training, interface maintenance, telecommunications, systems development and the IT infrastructure to support each of the Investment Managers. Though the industry has been relatively free of major trading errors, they have had to manage market exposure when their systems did not perform reliably.

The typical Investment Manager involved in the Separately Managed Account business now has adapted to this infrastructure. Each participates in multiple Sponsor programs and in multiple investment styles. They support multiple trading and allocation generation front-ends. The resulting staffing issues are significant. The learning curve for new staff, coverage for vacations or illness and turnover are challenges made exponentially more difficult by the use of these multiple front-ends. Trade order management and best execution standards must be managed with extreme care.

The need to eliminate operational drain created by the redundant development and maintenance of interfaces is clear. A central standard processing flow will reduce costs and operational risks, thereby improving the quality of services.

By identifying high traffic communications as well as the most critical communications between industry participants related to operations will allow us to reduce these redundancies. The communications should be categorized and content must be standardized for fields of


information, required vs. optional data, aggregation elements, data definitions and standard data formats. We must establish/identify communication and confirmation protocols.

Several months ago, the Money Management Institute Technology and Operations sub-committee established a working group to focus on the development of standard data communications between Sponsors and Investment Managers. After many long meetings and telephone conference calls, the first draft of the MMI’s Standards for Data Communications was produced.

The dedication of the volunteers who have worked on this project and continue to work on the development of the many additional data communication standards is extraordinary. The spirit of cooperation and selfless commitment of time and effort in this endeavor is truly remarkable. We have attached a list of the active participants in this project. There have been many leaders among the group who worked on several of these important documents. To mention a few would slight the team that we have assembled that has shown an outstanding resolve and persistence to produce the results. We list the group in its entirety below.

Dawn Andren Regent Investor Services Rick Austin UBS PW Sam Auxier Deloitte & Touche Pamela Birmingham Lockwood Elizabeth Boldis UBS PW Paul Bucaoto DTCC Nancy Camarata Bear Stearns Cheryl Cohen ING Furman Selz Sandra Fortier Lockwood Dana Fowler Citicorp (SSB) Mary Gentempo AIM Private Asset Management Elizabeth Getter-Johnson Rorer Asset Management Diane Goldstein Rittenhouse Financial Services, Inc. Manoj Gupte Morgan Stanley Paul LeCompte Roger Engemann Vincent Lepore ING Furman Selz Lana Cheng-Minafra Charles Schwab William O’Dell Lord Abbett Angela Pearson DTCC Jim Quartuccio Prudential Christine Rogers Neuberger & Berman Brian Silverman Goldman Sachs Greare Sutherland Invesco Brigette Vaughn Invesco Lynn Zabner Credit Suisse Asset Management, LLC

It is anticipated that the concept of the establishment of standards will be endorsed by all MMI members, and eventually all managed account industry participants. As a practical matter, we would expect Sponsors and Investment Managers to establish realistic timetables for transition to the standards over time. We believe the major vendors/Sponsors/Investment Managers will adopt these standards to provide improved services to clients. As standards are adopted, we anticipate middleware infrastructures to improve the operational efficiencies of all participants.


Introduction

The purpose of this document is to describe, diagram and define a standard set of operating and communications process flows and message specifications for the Managed Accounts industry. By defining and adopting these standards the Separately Managed Accounts (SMA) industry could make significant progress toward improving overall operational efficiency. This document will serve as the SMA industry repository for current and future standards.

Initially, the industry has elected to standardize the processes below because these are highly manual and prone to risk and errors.

• New Account Set-Up • Account Initiation • Funding Notification • Authorization to Trade

• Account Maintenance • Deposit Funding • Withdrawals • Account Termination

Additional processes have been identified as future standardization targets, and will be included in this document along with process flows and detailed specifications. Those identified are:

• Account Maintenance • Address changes • Broker changes • Custodian changes • Tax trading guidelines • Account title changes • Client Account Number changes • Short position or debit cash notifications • Client guideline and restriction changes • Fee calculation and processing information • Performance reporting • Corporate actions • Proxy information

• Trading • Buy and Sell orders • Indications of interest • Trade allocations • Step out notifications • Partial fill shares • All price executions • Error reporting, processing and correction communications

• Reconciliation


I. Separately Managed Accounts Industry

Separately Managed Accounts (SMAs) evolved in the early 1970s from the defined benefit pension funds market. E.F. Hutton formally introduced the first SMA in 1976 and was the sole provider for the next 10 years. The structure in the early years was relatively simple. Sponsors acted as the introducing intermediary, custodian and trade executor for the investor. Investment Managers (IMs) interacted directly with the client and provided asset management services in return for a fee negotiated with the investor. In 1987, E.F. Hutton launched the Select Managers program and assumed fiduciary, record keeping and reporting responsibility. Fees and account minimums were standardized, and the traditional consulting process assumed a greater significance. This remains the predominant structure of the SMA business today.

The industry had approximately $415B1 in assets under management (AUM) at the end of the first quarter, 2002. This includes all SMAs. The industry is in a state of rapid growth and has experienced a compound annual growth rate of 21% for the 6-year period ending December 31, 2001. Financial Research Corporation (FRC) projects that assets held in separately managed accounts will approach $1 trillion by the year 2005 and total nearly $3 trillion by the year 2011. The total number of individual accounts, estimated at 2 million in 2002, will increase to 4.2 million in 2005, 7.9 million in 2008, and 12.5 million in 2011.

The SMA industry is faced with numerous challenges in the technology and operations area. One key area of concern is the potential scalability of the business due to a lack of standardized protocols and processes. Achieving standardization is directly correlated to the level of connectivity and the free flow of data that exists between the Sponsors and IMs that serve the industry. The current state of connectivity in the SMA world does not allow for the efficient flow of this data as reflected in a recent study by FRC. In the study, SMA Investment Managers identified the current fractured operational environment as the single greatest challenge they face today, and the quantitative research concurs by showing that operations personnel/resources increase in direct correlation to a firms' SMA assets and SMA accounts under management.2

While the industry is growing rapidly, it is relatively small compared to other financial products. SMA assets are dwarfed by the mutual fund industry that has over $6.93 trillion in total assets under management. From an operational perspective, the current state of the SMA industry may be likened to the mutual fund industry some twenty years ago. At that time, the fund industry defined the standardized operational procedures and protocols that made it scalable and profitable and allowed it to become the investment product of choice for individual investors. Many believe that SMAs have reached a similar critical point in their life cycle.

A. Participants

Within the industry there are six categories of ‘participants’ that are described below. While these descriptions attempt to neatly categorize each participant, in practice there are actually many exceptions. For example, Sponsors are also often IMs for both their own and other

1 Money Management Institute, May 21, 2002 2 Best Practices in the Separately Managed Account Industry, Financial Research Corporation, 2001 3 2002 Mutual Fund Fact Book, Investment Company Institute, May 2002, pg. 23.


Sponsors’ SMA products. This blurring of roles is likely to increase substantially in both the short and long term.

1. Investors

There is a wide range of investor types with an increasing range in wealth. SMA programs now range in initial account size from as low as $10,000 all the way up to $5 million (or more) with an average size of about $300,000. Investor types range from high net worth (HNW) investors through pension plan participants.

2. The Financial Consultants / Advisors (FC)

Financial Consultants / Advisors (FCs or FAs as they are commonly known) are the primary distribution for the SMA industry. Usually they serve as the first point of contact for the investors and act as the intermediary between the Sponsor. In most cases FCs are Brokers that are either in-house (on the payroll) at the Sponsor or are contracted as independent representatives. In their advisor / consultant role, Brokers are compensated with advisory fees rather than sales commissions.

The duties of an FC include: • Determine client objectives • Create Profile • Provide investment suggestions and financial planning advice in alignment with

the client’s objectives.

3. Sponsor

Sponsors establish relationships with Custodians and select Investment Managers (IMs) by their investment styles. They perform ongoing due diligence to determine the IM’s participation level in their programs.

In most cases, Sponsors create separately managed account programs as enhanced services for their clients, contracting independently with each as a co-advisor with fiduciary responsibility. In some cases Sponsors create the framework for the SMA programs as a service for either clearing firms or independent financial consultants.

Additionally, Sponsors support FCs with profiling tools that facilitate the creation and review of the client’s investment objectives, and IM search databases for the IM selection process. In addition, Sponsors review the client’s investment objectives for suitability, execute trade orders from the Sponsor’s selected IMs, and handle the client communications and changes in each account. They create all client reports and generate performance on the individual styles.

The Sponsor universe covers the wirehouses, regional firms, Independent Broker/Dealers (IBDs), insurance companies and banks.

4. Investment Manager

Investment Managers (IMs) are the providers or manufacturers of the investment process for the client. To participate in a Sponsor’s program, an IM will enter into separate “master” agreements for each program and are subject to annual due diligence review meetings from the Sponsor.


IMs may act as sub advisors, primarily with each client selecting them as manager. In this capacity they serve as co-fiduciary with the Sponsor, managing client accounts in accordance with the investment policy stated in the master agreement. They exercise full investment discretion with respect to each individual account. The restrictions and individual client cash flows are managed accordingly on a per account basis.

Trades are created and blocked (combined) by the IM with execution primarily to the Sponsor’s trade desk in lieu of any commissions (as SMAs are zero commission).

The IM universe includes insurance companies, mutual fund managers and boutique firms.

5. Custodians

Custodians are designated by the Sponsor to settle all transactions, and update client records with respect to changes in stock or bonds, cash flows, corporate reorganizations. Custodian fees are generally a percentage of assets as the SMA world is mostly zero commission based. The Custodians are usually the same firms as the Sponsors.

6. Vendor and Outsourcer Service Providers

Service Providers accommodate the workflow and services that the parties require for SMAs with systems technology and applications. Some of the services include portfolio accounting applications such as complete database, trade order, performance generation and report writing capabilities including full security pricing, sector coding and security restriction functionality.

Portfolio accounting applications are primarily servicing IMs, but are also utilized by Sponsors.

Most vendors and outsourcers have interface capabilities that enable the same portfolio accounting systems to maintain a “dual” or matching set of books between the Custodian / Sponsor and IM on an automated basis. Furthermore, there are separate software applications that interface with the portfolio accounting systems such as: composite reporting systems 4, client relationship management systems5, tax efficient trading6 and automated workflow applications7. Others have entered the market and offer alternatives. However, at this time none of those vendors have achieved significant market share among IMs or Sponsors.

B. Products

The SMA account is composed of securities (which could include stocks, bonds, mutual funds, commodities, etc.) representing a particular target investment style, for example, large cap growth or small cap value, that is selected based on a particular investor’s profile or financial goals. This target portfolio is then managed according the investment style and securities are bought and sold in the account consistent with that style. The fee for the SMA account is usually

4 CAPS 5 Saratoga and Siebel 6 Northfield 7 Imaging Solutions


based on a fixed percentage in the range of 1% to 3% but which may vary based on assets, complexity of investment style, etc. The advantage of this fee arrangement for the investor is that it is defined at the inception of the account.

The number of products and ‘flavors’ of the SMA account is increasing as IMs and Sponsors look to differentiate their products. Some of the major SMA products include the following:

1. Separately Managed Accounts

a. Retail The retail SMA account is the traditional account sold by FCs and administered by the wirehouses. The investment styles are well-defined, e.g. large cap, small cap, etc. and based on an investor’s risk profile. The primary investors are individuals and account minimums begin as low as $50,000.

b. Institutional The Institutional SMA account is sold by IMs or the wirehouses and is geared toward corporations, pension plans, etc. Often the account mirrors a particular mutual fund or hedge fund and is managed by that fund’s manager. The primary ‘buyer’ of these accounts are corporate investors or pension plan administrators and the minimums exceed $1 million.

c. Mutual Fund Wrap The mutual fund wrap is an SMA account that only uses mutual funds as the investment vehicle. The mutual fund wrap is sold by mutual fund companies, (often using their own mutual fund products) financial advisors and registered investment advisors and brokers. The investor profile is the same as for the Retail SMA account.

2. On-line Managed Accounts

The ‘on-line’ SMA account is a product that allows an investor to build their own target portfolio that includes stocks, mutual funds and bonds8. Usually little or no advice is provided and fees for brokerage and custody are bundled into the account charge. This type of account has gained much publicity but very limited actual accounts or assets.

3. Tax Aware Accounts

The ‘tax aware’ SMA is designed to consider an investor’s tax bracket and investment goals and utilize and time trading in order to limit tax exposure. This capability is geared toward ‘high-end’ SMA investors (above $250,000) and is becoming a very popular product.

4. Multi-Strategy Portfolios

‘MSPs’ or ‘MDAs’ are accounts that integrate multiple investment styles into a single account or strategy, providing portfolio diversity (and presumably less market risk). These SMAs usually have the Sponsor act as the ‘manager of managers’, selecting investment styles, IMs and allocations to those IMs for a single account. Minimums for these accounts usually start at $100k and are targeted at the ‘high-end’ SMA investor.

As the SMA industry adds participants and programs, the number of style categories will continue to increase over what is described here. As the number and type of categories increase, the variance in operations and processing will also become more challenging to manage. The

8 FOLIO fn


processes described in this paper are designed to be as broad as possible in order to support an increasing variation in product types.

C. Current Processes

The diagrams below illustrate the dominant modes of communication between key players in the industry. The total number of communication points equals the total number of relationships between individual participants.

SMA Industry


Single partner flow

The data currently flows among industry participants via regular mail, telephone calls, faxes, emails, manual uploads and downloads and semi-automatic and fully automatic interfaces. Because there is no standard communication protocol, there is little efficiency. There are a large number of one-off interfaces created in order to attain the current fragmented level of automation. Considerable resources (both human and financial) are spent on continuous re-designing and re-engineering business processes in an attempt to be more fully automated and reduce errors.

Sponsor Broker/Dealer

• Suitability review ü Profile

• Back Office processing in accounting system ü Establish Accounts

– Money Market – Brokerage

ü Record keeping – Account Activity

ü Sends client investment information to: – IM – Custodian

• Treasury Operations ü Receives funds from Client ü Check to Custodian, or ü ACAT to Custodian

• Trading Desk ü Executes orders ü Records order activity in accounting

system

Investment Manager

• Quality control ü Review and validate requirements ü Accept client

• Investment Administration Accounting System ü Determine asset allocations ü Cost Basis ü Re-balance allocations

– Determine buys/sells

• Trading Team ü Bundles orders sorted by Sponsor ü Places orders with Sponsor’s trade

desk

Custodian • Retains account info

• Proxy record keeping

• Facilitates Client reporting

• Holds physical shares

Rep / Financial Planner

• Client Interaction ü Evaluate client info ü Determine suitability ü Create Profile

• Input Client Data ü Direct access to Sponsor’s

system

Dedicated Front-End

Mail E-mail

Fax

Mail E-mail

Fax

Mail E-mail

Fax


II. Business Interactions

The purpose of this section is to describe the business interaction between participants for particular processes. The primary assumption in developing these descriptions is that these processes would be implemented systematically and uniformly, eliminating the current paper, fax and postal mail exchange of information that is the prevalent form of information exchanges between Sponsors, IMs and Custodians.

The basic approach to the process flow design, and that is integrated into the following descriptions are the following:

• All message files from Sponsors to IMs will be followed by an immediate acknowledgement that a Notification message was received. Acknowledgements can be implemented within the communication protocol that supports the standard process.

• The actual ‘accept’ or ‘reject’ message would be received at some later time, the timeframe to be negotiated between IM and Sponsor, as to whether the message is accepted or rejected. If the message rejects, a Reject Code and a comment supporting the reject would be sent to the initiator of the message.

The message and flow standards have been developed with the assumption that they will be implemented electronically. Although these are defined as distinct messages, it is possible that they could be combined into one electronic message.

Since this is the business layer of the message, it should be assumed that the technology layer and the protocol selected will handle message delivery, header/trailer information, time stamps, etc. and are not described in this document.

A. New Account Set-Up

The New Account Set-Up process at the IM starts after the contractual documentation process between the Client and Sponsor is complete. To complete this process, the FC submits the client’s profile to the Sponsor’s processing (or operations) department.

The standard New Account Set-up process is an interaction between Sponsors and their IM partners to set-up accounts at the IMs on behalf of the Sponsors clients. There are four distinct processes for New Account Set-Up:

• New Account Profile Notification • New Account Funding Notification • Authorization to Trade Notification, and • Trading Initiation (identified as a future objective)

The New Account Set-Up Notifications standards are defined below and include a list of required message elements; the detailed elements for each message are located under section IV: Data Formats.


A1. New Account Profile Notification

The New Account Profile contains a large amount of data and is formatted in three sections.

The New Account Profile Notification is forwarded to the selected IM for their review and subsequent approval or rejection. The detailed message elements for New Account Profile are located under section IV. Data Formats.

1a. Acknowledgment: New Account Profile

The IM notifies the Sponsor via the New Account Profile Acknowledgement of receipt of New Account Profile. The New Account Profile Acknowledgement information requirements are:

1b. Profile Accept / Reject

IM performs a suitability review on the Profile received by analyzing the transmission to determine if the client’s data and responses to the questionnaire are appropriate for the selected investment strategy. In some cases, additional information may be necessary to complete the suitability review, which was not part of the original Profile (if applicable to the IM), and can be obtained from the Sponsor or FC. Upon completion of the suitability review, notification is then provided to the Sponsor via the Acceptance/Rejection message.

The timeframe for accept/reject by the IM will be negotiated between the IM and the Sponsor; however the message default will be “Original Request Received Date & Time” plus 120 hours (5-days). After 5-days, the messages will be Rejected.

A2. New Account Funding Notification

Once funding has been received, the Sponsor will initiate a message indicating funding has been received. The Funding Notification will include the following information:

• Inception account positions (with tax-lots), cash and unsettled trades • Security master file information on inception positions

The required data for the New Account Funding notification are:

Notification Type Notification Type code table

Notification Date & Time Date & Time that the message sent by Sponsor

Date & Time Date & Time that the message received by IM

Client Account Number Client Account Number

Legal Account Title Legal title of account

Sponsor Firm ID Code for Sponsor Firm (for routing purposes)

IM Firm Industry accepted code for IM Firm (for routing purposes)

IM Style Individual IM's description for their tactical investment allocation approach

Custodian Account Number Required only if used on Profile, when Custodian


is not the Sponsor

Custodian Designation Required if different from sponsor firm, default is Sponsor

CUSIP # ID ü This format is for US currency holdings ü Cash or cash equivalent should be considered

holdings ü CUSIP not required if cash holding

Ticker ü Required only if holdings are entirely Cash or Cash equivalent (CEQ)

ü Ticker = CASHTICK for Cash/CEQ ü Ticker is a 2nd security identifier for equities

Position Total Shares Sum of all tax lots

Position Total Cost Total cost of the position

Position Total Market Value Total Current Market Value

(For Each tax lot)

Tax lot Date Purchase date

Shares or Principal Amount Shares/Principal per lot

Valuation price Current valuation for the security

A3. Authorization to Trade Notification.

The Sponsor notifies the IM that it is now authorized to trade in the account. A notification message is sent to initiate the process. Message integrity will be implemented in the technology layer. The following are the required information elements: Notification Type Notification Type code table





Sponsor Firm ID Code for Sponsor Firm (originator of file)


Custodian Account Number Required only if used on Profile, when Custodian is not the Sponsor


Discretion to begin Date


B. Account Maintenance

Once the account has been set-up and trading initiated, there several types of ongoing account maintenance occurring between the Sponsors and their IM partners. Currently these processes are often conducted by phone calls, faxes, emails or postal mail notifications.

The Account Maintenance Notification standards are defined below and are incorporated into the same standard flow process as defined in the Account Set-Up section above. These standards and file descriptions have been developed with the assumption that they will be implemented electronically. Under each Notification definition is a list of required information; a comprehensive list of information elements for each message are located under section IV: Data Formats.

Upon receipt of an Account Maintenance Notification by the IM, the following processes take place:

a. Immediately an acknowledgement that the message was received is sent back to the Sponsor.

b. Following an agreed upon timeframe, a message is returned, either that the notification message was Accepted or Rejected. If the latter, a Reject Code is indicated with a text comment field.

B1. Deposit Funding Notification

Deposit funding notification begins with the Sponsor sending the Deposit Funding file (described below) to the IM to inform the IM of deposit activity in a client account. The deposit funding can be either cash or securities. If the funding is in cash, the Deposit Funding Notification acts as an instruction to begin investing the additional funds. If the funding consists of securities, the Deposit Funding acts as a notification of securities received into the account. Notification Type Notification Type code table









CUSIP # ID ü This format is for US currency holdings ü Cash or cash equivalent should be considered

holdings ü CUSIP not required if cash holding


Ticker ü Required only if holdings are entirely Cash or Cash equivalent (CEQ)




Position Total Market Value Total Current Market Value; should equal Current Face if asset backed security

(For Each tax lot)




Unit Cost Acquisition price per share

Total Cost Total cost of lot

B2. Withdrawal Notification

Sponsor sends the file to the IM to inform the IM of client’s request for a cash withdrawal on an account. The IM verifies that funds are available.

The required information for the Withdrawal Notification: Notification Type Notification Type code table

Instruction Type Initial indicator for the request. Could also include an option for a tax harvest request

Notification Date & Time Date & Time that the message sent by Sponsor.

Date & Time Date & Time that the message received by IM.

Client Account Number Sponsor’s Client Account Number




Custodian Designation Required if different from sponsor firm

CUSIP # ID US currency based transactions. For both cash withdrawal and fees, the cash amount is indicated by the cash holding. CUSIP is not required for the cash holding; Ticker should be used. Refer to Ticker explanation.

Ticker For both cash withdrawal and fees, the cash amount is indicated through the cash holding; The Ticker is required in the cash holding case and should be defined as “CASHTICK”. In the case of a security withdrawal (deliver out), the Ticker is used as a 2nd security identifier.




Position Total Market Value Total Current Market Value

(For Each tax lot)




B3. Termination of Account Notification

A “termination” is defined as when the Sponsor Firm notifies the IM that the services provided by the IM are no longer required for a specific account(s). At that point, the specific account should have no further transactions other than those included in the termination communication and/or settlement of any pending transactions. The Sponsor is the party that first notifies the IM regarding a change of status on an account. The options are: • TK Terminate & Keep • SLQ Sponsor Liquidation • MLQ IM Liquidation • SPL Sponsor Partial Liquidation • MPL IM Partial Liquidation

The IM is the party who acts on the Sponsor’s communication by acknowledging and acting accordingly on the instructions received from the Sponsor. In addition, the IM must notify the Sponsor of pending trades. Notification Type Notification Type code table

Notification Date & Time Date & Time that this message sent by Sponsor

Date & Time Date & Time this message received by IM, Custodian

Client Account Number Sponsor’s Client Account Number





Termination Instructions Liquidation Table Codes

Reason for Termination Comments

Holdings information starts: This information should be included for the “MPL” termination instruction.

CUSIP # ID This format is for US currency based transactions. The CUSIP indicates the CUSIP of the holding to be liquidated. Each holding to be liquidated should include this “Holdings information” data.



Position Total Cost Total cost of the position to be liquidated

Position Total Market Value Total Current Market Value of the position to be liquidated

(For Each tax lot)





III. Business Flow Processes

Introduction The flows processes diagram the high-level business flows of standard messages between IMs, Sponsors, and Custodians that pertain to new account set-up, and account maintenance events. The business layer is the basis for developing the logical layer once the detailed data fields have been defined. The combined business and logical layer specification will then provide the basis for developing the technical architecture for communications between the three parties.


A. New Account Set-up A1. New Account Profile

Sponsor Investment Manager

Sponsors New Account Profile Notification

SMA Operations

1. New Account Profile Notification

1a. Manager Acknowledges receipt of notification Sponsors

SMA Operations

Acknowledge receipt of Profile Notification

Sponsors

1b. Manager accepts or rejects Profile Notification

SMA Operations

Accept, or Reject Profile Notification

Time <= 60 minutes

• Source Data Sponsor firm, FC and IM information, selected Program, etc.

• Account Data Client Account Number, tax ID, etc. • Client Data Client name, address, etc.

Reject Reason Table • Below Minimum Account Size • Excessive Restrictions • Incomplete / Inconsistent • Invalid Information • Investment Policy Sponsor • Missing Required Data • Not Suitable For Investment Strategy • Other. • System Not Ready • Trade Not Allowed on Account • Unknown Account • Unknown Source Code • Unknown Sponsor / Source


A2. New Account Funding Notification


Sponsors New Account Funding Notification

SMA Operations

2. New Account Funding Notification


SMA Operations

Acknowledge receipt of New Account Funding Notification

Sponsors

2b. Manager accepts or rejects New Account Notification

SMA Operations

Accept, or Reject New Account Funding Notification

Time <= 60 minutes

Account Number Amount Style

Reject Reason Table • Missing Required Data • Not Suitable For Investment Strategy • Other. • System Not Ready • Trade Not Allowed on Account • Unknown Account • Unknown Source Code • Unknown Sponsor / Source


A3. Authorization To Trade


Sponsors Authorization To Trade Notification

SMA Operations

3. Authorization To Trade Notification


SMA Operations

Acknowledge receipt of Authorization To Trade Notification

Sponsors

3b. Manager accepts or rejects Authorization To Trade Notification

SMA Operations

Accept, or Reject Authorization To Trade Notification

Time <= 60 minutes

Account Number Amount Management Date Style

Reject Reason Table • Invalid Information • Investment Policy Sponsor • Missing Required Data • Not Suitable For Investment Strategy • Other. • System Not Ready • Unknown Account • Unknown Source Code • Unknown Sponsor / Source



B1. Deposit Funding Notification


Sponsors Deposit Funding Notification

SMA Operations

1. Deposit Funding Notification


SMA Operations

Acknowledge receipt of Deposit Funding Notification

Sponsors

1b. Manager accepts or rejects Deposit Notification

SMA Operations

Accept, or Reject Deposit Funding Notification

Time <= 60 minutes

Account Number Amount Style

Reject Reason Table • Investment Policy Sponsor • Missing Required Data • Other. • System Not Ready • Trade Not Allowed on Account • Unknown Account • Unknown Source Code • Unknown Sponsor / Source


B2. Withdrawal Notification


Sponsors

Withdrawal Notification

SMA Operations

2. Withdrawal Notification

2a. Manager Acknowledges receipt of notification

Sponsors SMA Operations

Acknowledge receipt of Termination Notification

Sponsors

2b. Manager accepts or rejects Withdrawal Notification

SMA Operations

Accept, or Reject Termination Notification

Time <= 60 minutes

Account Number Account Name Holdings Amount

Reject Reason Table • Trades Not Allowed • Unknown Account


B3. Account Termination


Sponsors

Account Termination Notification

SMA Operations

3. Termination Notification

3a. Manager Acknowledges receipt of notification

Sponsors SMA Operations

Acknowledge receipt of Termination Notification

Sponsors

3b. Manager accepts or rejects Termination Notification

SMA Operations

Accept, or Reject Termination Notification

Time <= 60 minutes

Terminate & Keep Sponsor Liquidation IM Liquidation Sponsor Partial Liquidation IM Partial Liquidation

Reject Reason Table • Unknown Account

uRequired Copyright © 2002 Money Management Institute. All Rights Reserved 24

IV. Data Formats

A. New Account Set Up A1. Notification: New Account Profile • Data input from: Sponsor or via Sponsor service provider • Data output to: IM or IM service provider, Custodian

FIELD NAME FIELD ENTRY DESCRIPTION SOURCE DATA u Notification Type New Account Profile Notification Type code table

u Notification Date & Time mm/dd/ccyy; hh:mm:ss Date & Time that the message sent by Sponsor

u Date & Time mm/dd/ccyy; hh:mm:ss Date & Time that the message received by IM

u Sponsor Firm ABC/123 ID Code for Sponsor Firm (originator of file) u Sponsor Program SPA, CES, Advisory, Subadvisory Sponsor Firm’s sub advisory program or designation of a dual contract

relationship

u IM Firm IM Code Industry accepted code for IM Firm (for routing purposes) u Branch Ledger Number Sponsor firm branch identification number u FC / Broker Number Sponsor firm FC / broker identification number u FC / Broker Team/Name FC / Broker name associated to specified account 3RD Party Identifier Number Default is No 3rd party (trust) affiliated & unaffiliated company identifying number 3RD Party Name Default is No 3rd party (trust) affiliated & un-affiliated company name FC/ Broker Address 1 FC/ Broker mailing address for specified account FC/ Broker Address 2 FC/ Broker mailing address for specified account FC/ Broker Address 3 FC/ Broker mailing address for specified account FC/ Broker Address 4 FC/ Broker mailing address for specified account FC/ Broker City FC/ Broker mailing address for specified account FC/ Broker State FC/ Broker mailing address for specified account FC/ Broker Zip Code FC/ Broker mailing address for specified account FC/ Broker Country FC/ Broker mailing address for specified account u FC/ Broker Phone Number FC/ Broker phone number for specified account FC/ Broker Fax Number FC/ Broker fax number for specified account FC/ Broker Email Address FC/ Broker email address for specified account FC/ Broker – Correspond Via Email Yes/No Designation of FC/ Broker’s desire to receive IM correspondence via

email

A. New Account Set-Up, cont.


FIELD NAME FIELD ENTRY DESCRIPTION ACCOUNT DATA u Client Account Number 123-98765 Sponsor’s Client Account Number u Legal Account Title Official title of client account Social Security / Tax ID Number Client personal identification number for this specific account u IM Style “Global” Individual IM's description for their tactical investment allocation

approach Margin/Collateral Default is None Designates if the account is a margin account or collateral at the

Custodian u Total Account Value for this account Sum of cash and securities (USD) Custodian Designation Default is Sponsor Designation of Custodian for specified account u Custodian Account Number Default is acct # Custody number for specified account Custodian Contact Custody contact name Custodian Telephone Number Telephone number of contact person Clearing Firm Default is Sponsor Name of the clearing firm if the sponsor clears through another firm Clearing Number Sponsor's clearing number at the clearing firm, if the Sponsor clears

through another firm u IM Change Yes/No Designated existence of prior IM for Sponsor program u Client Account Number Change Yes/No Designated existence of prior account for specified account within

existing investment IM u Old Client Account Number Prior Client Account Number for specified account u Account Type Attachment I Legal entity u Account Type - ERISA Yes/No (Default is No) Indicates that this client account requires ERISA procedures

(Employee Retirement Income Security Act) u Account Risk Tolerance Conservative, Moderate,

Aggressive Client’s allowable investment risk for designated assets in the selected strategy

u Tax Status Tax Deferred Account subject to US taxation u Manage Tax Aware Yes/No (Default is No) Designation of client desire to have specified account managed with

tax sensitivity Municipal Accounts – State Specific

Designation Yes/No Designating client request to have municipal strategy invested in

specified state Municipal Accounts – State Designation National or State Specific Client designated state for specified account: Post Office Designation Systematic Withdrawal Monthly, Quarterly, Yearly,

Default is None Designate the requirement for regularly occurring account redemptions

Systematic Withdrawal Start Date mm/dd/ccyy Designation of initial withdrawal date Withdraw All Income Yes/No (Default is No) Designation that all income will be withdrawn from the account



FIELD NAME FIELD ENTRY DESCRIPTION Withdrawal Amount Designate dollar amount of asset redemptions Unsupervised Assets Yes/No (Default is No) Designation that the specified Client Account Number will hold

unsupervised assets Restrictions Default is No, If Yes, the following

are necessary Designation of investment restrictions on specified account

Restriction Industry CUSIP/ISIN/SIC Industry restriction for specified account Restriction Country Country restriction for specified account Restriction General Type Group restriction for specified account u Restriction Individual 1 CUSIP Restricted CUSIP identifier u Restriction Individual 2 Restricted security alpha identifier Restriction Individual 3 Restricted security name Restriction Individual 4 Restricted security country identification Restriction Individual 5 Restricted security industry code Restriction Individual 6 Restricted security maturity date (bonds) Restriction Individual 7 Restricted security interest rate (bonds) Restriction Individual 8 Restricted security trading exchange New Account Yes/No Designates if specified client account is new to the Sponsor program Terminated IM Prior IM for specified account u Account Style Change Yes/No Designated existence of prior style for specified account within prior

investment IM Terminated Style Prior style for specified account Cash Value for This Account Cash in client account for investment (USD) Security Value for This Account Value of securities in account for investment (USD) CLIENT DATA u Client Name 1 Client name associated with specified account Client Address Line 1 Client mailing address for specified account Client Address Line 2 Client mailing address for specified account Client Address Line 3 Client mailing address for specified account Client Address Line 4 Client mailing address for specified account Client City Client mailing address for specified account u Client State Client mailing address for specified account Client Zip Code Client mailing address for specified account u Client Country Default is USA Client mailing address for specified account u Designated Country of the Client Default is USA Designation of the country of the client



FIELD NAME FIELD ENTRY DESCRIPTION Client Correspondence Yes/No Does the client want any correspondence from the IM u Estimated Net Worth Client’s designation of net value of their assets u Date of Birth: client 1 Mm/dd/ccyy Client date of birth u Total Annual Income Client designated total yearly income u Client Risk Tolerance Conservative, Moderate,

Aggressive Client’s allowable investment risk for designated assets in the selected strategy

u Proxy Voting Yes/No (Default is Yes) Voting rights have been delegated to the investment IM Total Account Value in program (all IMs) Sum of cash and securities (USD) Client Salutation 1 Ms., Miss, Mrs., Mr., Dr. Client prefix Client Name 2 Client name associated with specified account Client Salutation 2 Ms., Miss, Mrs., Mr., Dr. Client prefix Client Phone Number Client phone number for specified account Client Fax Number Client fax number for specified account Client Email Address Client email address for specified account Client – Correspond Via Email Yes/No Designation of client’s desire to receive investment IM

correspondence via email Interested Party Name Secondary party associated with specified account Interested Party Category Accountant Lawyer Interested Party’s relationship to client Interested Party Address 1 Secondary party mailing address for specified account Interested Party Address 2 Secondary party mailing address for specified account Interested Party Address 3 Secondary party mailing address for specified account Interested Party Address 4 Secondary party mailing address for specified account Interested Party City Secondary party mailing address for specified account Interested Party State Secondary party mailing address for specified account Interested Party Zip Code Secondary party mailing address for specified account Interested Party Country Secondary party mailing address for specified account Interested Party Email Address Secondary party email address for specified account Interested Party Correspondence Yes/No Does the Interested Party want any correspondence from the IM Interested Party – Correspond Via Email Yes/No Designation of Interested Party’s desire to receive investment IM

correspondence via email Expected Retirement Date: client 1 Mm/ccyy Date designated as expected date of retirement Date of Birth: client 2 Mm/dd/ccyy Client date of birth Expected Retirement Date: client 2 Mm/ccyy Date designated as expected date of retirement Federal Tax Rate Client designated annual federal tax rate



FIELD NAME FIELD ENTRY DESCRIPTION State Tax Rate Client designated annual state tax rate Do You Have Other Managed Accounts? Yes/No Designation of client that additional managed accounts are held within

Sponsor Program Other Inv Mngr(s) Other investment IM of specified client managed account Other Inv Mngr Acct Number(s) Other Client Account Number of specified client managed account u Account Billing Sponsor Firm / Invoice / Debit Designating how the fee will be applied to specified account through a

reduction in assets or payment outside of account Questionnaire Type 1, 2, 3, 4, 5 Record the type of suitability questionnaire a Sponsor firm could use

in a multiple questionnaire environment u Questionnaire Answer 1 A, B, C, D, E, N/A Client response to Sponsor firm profile question u Questionnaire Answer 2 A, B, C, D, E, N/A Client response to Sponsor firm profile question u Questionnaire Answer 3 A, B, C, D, E, N/A Client response to Sponsor firm profile question u Questionnaire Answer 4 A, B, C, D, E, N/A Client response to Sponsor firm profile question u Questionnaire Answer 5 A, B, C, D, E, N/A Client response to Sponsor firm profile question u Questionnaire Answer 6 A, B, C, D, E, N/A Client response to Sponsor firm profile question u Questionnaire Answer 7 A, B, C, D, E, N/A Client response to Sponsor firm profile question u Questionnaire Answer 8 A, B, C, D, E, N/A Client response to Sponsor firm profile question u Questionnaire Answer 9 A, B, C, D, E, N/A Client response to Sponsor firm profile question u Questionnaire Answer 10 A, B, C, D, E, N/A Client response to Sponsor firm profile question u Questionnaire Answer 11 A, B, C, D, E, N/A Client response to Sponsor firm profile question u Questionnaire Answer 12 A, B, C, D, E, N/A Client response to Sponsor firm profile question u Questionnaire Answer 13 A, B, C, D, E, N/A Client response to Sponsor firm profile question u Questionnaire Answer 14 A, B, C, D, E, N/A Client response to Sponsor firm profile question u Questionnaire Answer 15 A, B, C, D, E, N/A Client response to Sponsor firm profile question u Questionnaire Answer 16 A, B, C, D, E, N/A Client response to Sponsor firm profile question u Questionnaire Answer 17 A, B, C, D, E, N/A Client response to Sponsor firm profile question u Questionnaire Answer 18 A, B, C, D, E, N/A Client response to Sponsor firm profile question u Questionnaire Answer 19 A, B, C, D, E, N/A Client response to Sponsor firm profile question u Questionnaire Summary Total score derived from summing points for each question Time Horizon <1, 1–2, 2-5, 5-10 10-20, 20+ Time client expects to keep assets invested in years



1a. Acknowledgement: New Account Profile Notification • Data input from: IM or via IM service provider • Data output to: Sponsor or Sponsor service provider, Custodian

FIELD NAME FIELD ENTRY DESCRIPTION u Notification Date & Time mm/dd/ccyy; hh:mm:ss Date & Time that Ack message sent by IM

u Date & Time mm/dd/ccyy; hh:mm:ss Date & Time Ack message received by Sponsor, Custodian

u Original Request Received Date & Time mm/dd/ccyy; hh:mm:ss Date & Time CP notification received by IM

u Client Account Number 123-98765 Sponsor’s Client Account Number

u Legal Account Title “Smith Family Trust” Legal title of account

u Sponsor Firm ABC/123 ID Code for Sponsor Firm (for routing purposes) FC / Broker Number Sponsor firm FC / broker identification number

u IM Firm IM Code Industry accepted code for IM Firm (originator of Ack file)

u IM Style “Global” Individual IM's description for their tactical investment allocation approach

u Custodian Account Number Required if used on Profile; Custodian is not the Sponsor

• Custodian Designation Sponsor Required if different from sponsor firm, default is Sponsor

1b. Accept / Reject: New Account Profile Notification • Data input from: IM or via IM service provider • Data output to: Sponsor or Sponsor service provider, Custodian

FIELD NAME FIELD ENTRY DESCRIPTION u Notification Date & Time mm/dd/ccyy; hh:mm:ss Date & Time that the A/R message sent by IM

u Date & Time mm/dd/ccyy; hh:mm:ss Date & Time the A/R message received by Sponsor, Custodian

u Original Request Received Date & Time mm/dd/ccyy; hh:mm:ss Date & Time CP notification received by IM






FIELD NAME FIELD ENTRY DESCRIPTION u IM Firm IM Code Industry accepted code for IM Firm (originator of A/R file)




u Decision Accept / Reject If “Reject”, the Reject Code is required

• Reject Code See Reject Code table

Decision Comments Open comment field that can be used to describe circumstances for rejection

u Expiration Date mm/dd/ccyy; hh:mm:ss Received Date & Time + 120 Hours

A2. Notification: New Account Funding • Data input from: Sponsor or via Sponsor service provider • Data output to: IM or IM service provider, Custodian

FIELD NAME FIELD ENTRY DESCRIPTION u Notification Type New Account Funding Notification Type code table



u Client Account Number 123-98765 Client Account Number

u Legal Account Title ”Smith Family Trust” Legal title of account


u IM Firm IM Code Industry accepted code for IM Firm (for routing purposes)

IM Style “Global” Individual IM's description for their tactical investment allocation approach





FIELD NAME FIELD ENTRY DESCRIPTION u CUSIP # ID 9 digit # ü This format is for US currency holdings

ü Cash or cash equivalent should be considered holdings ü CUSIP not required if cash holding

Currency USD Base Currency of Security

Exchange Exchange code where security is traded

u Ticker ABC ü Required only if holdings are entirely Cash or Cash equivalent (CEQ)


Security Name ABC Corp Full company description

Coupon Date mm/dd/ccyy For Fixed Income only – Coupon due date

Dated Date mm/dd/ccyy For Fixed Income – Start Date for accrued int

Maturity Date mm/dd/ccyy For Fixed Income only – Principal due date

Factor For Fixed Income only - Factor Rate

Factor Date mm/dd/ccyy For Fixed Income – Factor Date of security

Original Face $$ For Fixed Income only – Face Value at issue

Current Face $$ For Fixed Income only – Current Value

Position Indicator Long/short Be able to identify long/short positions (optional)

u Position Total Shares # of shares Sum of all tax lots

u Position Total Cost $$ Cost Total cost of the position

u Position Total Market Value $$ Market Value Total Current Market Value

(For Each tax lot)

u Tax lot Date mm/dd/ccyy Purchase date

u Shares or Principal Amount # of shares Shares/Principal per lot

u Valuation Price Current Mkt Price Current valuation for the security

Unit Cost $$ Acquisition price per share

Total Cost Cost of lot Total cost of lot



2a. Acknowledgement: New Account Funding Notification • Data input from: IM or via IM service provider • Data output to: Sponsor or Sponsor service provider, Custodian



u Original Request Received Date & Time mm/dd/ccyy; hh:mm:ss Date & Time NAF notification received by IM



u Sponsor Firm ABC/123 ID Code for Sponsor Firm (for routing purposes)





2b. Accept / Reject: New Account Funding Notification • Data input from: IM or via IM service provider • Data output to: Sponsor or Sponsor service provider, Custodian



u Original Request Received Date & Time mm/dd/ccyy; hh:mm:ss Date & Time NAF notification received by IM




u IM Firm IM Code Industry accepted code for IM Firm (originator of A/R file)



FIELD NAME FIELD ENTRY DESCRIPTION u IM Style “Global” Individual IM's description for their tactical investment allocation

approach



u Decision Accept / Reject If the IM is accepting a subset of the listed funding securities, this is an “Accept” with a list of securities not accepted in the Decision Comments

• Reject Code See Reject Code table

Decision Comments • Open comment field that can be used to describe circumstances for rejection

• Securities listed here as not accepted if IM is accepting subset of the listed funding securities


A3. Notification: Authorization To Trade • Data input from: Sponsor or via Sponsor service provider • Data output to: IM or IM service provider, Custodian

FIELD NAME FIELD ENTRY DESCRIPTION u Notification Type Authorization To Trade Notification Type code table





u Sponsor Firm ABC/123 ID Code for Sponsor Firm (originator of file) FC / Broker Number Sponsor firm FC / broker identification number





FIELD NAME FIELD ENTRY DESCRIPTION u Custodian Account Number Required if used on Profile; Custodian is not the Sponsor


u Discretion to Begin Date mm/dd/ccyy The date the IM took responsibility for investment of the client account

Inception Value $100,500.00 The market value of the account at the beginning of the "Begin Date"

Restriction “Tobacco” This should be entered only if a restriction(s) has (have) been added after the original Profile was Accepted by the IM. If multiple restrictions need to be communicated, the "Other Information" can be used.

Other Information Can be used if additional information is to be communicated to the IM beyond the Profile and Funding information.

3a. Acknowledgement: Authorization To Trade Notification • Data input from: IM or via IM service provider • Data output to: Sponsor or Sponsor service provider, Custodian



u Original Request Received Date & Time mm/dd/ccyy; hh:mm:ss Date & Time ATT notification received by IM








Discretion to Begin Date mm/dd/ccyy The date the IM took responsibility for investment of the client account

Inception Value $100,500.00 The market value of the account at the beginning of the "Begin Date"



FIELD NAME FIELD ENTRY DESCRIPTION Restriction “Tobacco” This should be entered only if a restriction(s) has (have) been added

after the original Profile was Accepted by the IM. If multiple restrictions need to be communicated, the "Other Information" can be used.

Other Information For information to be communicated to the IM beyond the Profile and Funding information.

3b. Accept / Reject: Authorization To Trade Notification

• Data input from: IM or via IM service provider • Data output to: Sponsor or Sponsor service provider, Custodian



u Original Request Received Date & Time mm/dd/ccyy; hh:mm:ss Date & Time ATT notification received by IM








u Decision Accept / Reject If “Reject” then Reject Code Required

• Reject Code See Reject Code Tables


Discretion to begin Date mm/dd/ccyy The date the IM took responsibility for investment of the client account



FIELD NAME FIELD ENTRY DESCRIPTION Inception Value $100,500.00 The market value of the account at the beginning of the "Begin Date"

Restriction “Tobacco” This should be entered only if a restriction(s) has (have) been added after the original Profile was Accepted by the IM. If multiple restrictions need to be communicated, the "Other Information" can be used.

Other Information Can be used if additional information is to be communicated to the IM beyond the Profile and Funding information.




B1. Notification: Deposit Funding • Data input from: Sponsor or via Sponsor service provider • Data output to: IM or IM service provider, Custodian

FIELD NAME FIELD ENTRY DESCRIPTION u Notification Type Deposit Funding Notification Notification Type code table










u CUSIP # ID 9 digit # ü This format is for US currency holdings ü Cash or cash equivalent should be considered holdings ü CUSIP not required if cash holding



u Ticker ABC ü Required only if holdings are entirely Cash or Cash equivalent (CEQ)



Coupon Date mm/dd/ccyy For Fixed Income only – Coupon Due Date

Dated Date mm/dd/ccyy For Fixed Income – Start Date for Accrued Interest

B. Account Maintenance, cont.


FIELD NAME FIELD ENTRY DESCRIPTION Maturity Date mm/dd/ccyy For Fixed Income only – Principal Due Date


Factor Date mm/dd/ccyy For Fixed Income – Factor Date of Security

Original Face $$ For Fixed Income only – Face Value at Issue





u Position Total Market Value $$ Market Value Total Current Market Value; should equal Current Face if asset backed security

(For Each tax lot)

u Tax Lot Date mm/dd/ccyy Purchase date


u Valuation Price Current Mkt Price Current valuation for the security

u Unit Cost $$ Acquisition price per share

u Total Cost Cost of lot Total cost of lot

1a. Acknowledgement: Deposit Funding Notification • Data input from: IM or via IM service provider • Data output to: Sponsor or Sponsor service provider, Custodian



u Original Request Received Date & Time mm/dd/ccyy; hh:mm:ss Date & Time DF notification received by IM

c Client Account Number 123-98765 Sponsor’s Client Account Number




FIELD NAME FIELD ENTRY DESCRIPTION u Sponsor Firm ABC/123 ID Code for Sponsor Firm (for routing purposes) FC / Broker Number Sponsor firm FC / broker identification number





1b. Accept / Reject: Deposit Funding Notification • Data input from: IM or via IM service provider • Data output to: Sponsor or Sponsor service provider, Custodian











u Decision Accept / Reject If the IM is accepting a subset of the listed funding securities, this is an “Accept” with a list of securities not accepted in the Decision Comments

u Reject Reason Code Reason for rendering a Reject Decision



FIELD NAME FIELD ENTRY DESCRIPTION Decision Comments Open comment field that can be used to describe circumstances for

rejection

Securities listed here as not accepted if IM is accepting subset of the listed funding securities


B2. Notification: Withdrawal • Data input from: Sponsor or via Sponsor service provider • Data output to: IM or IM service provider, Custodian

FIELD NAME FIELD ENTRY DESCRIPTION u Notification Type Withdrawal Notification Notification Type code table

u Instruction Type Withdrawal / Fees Initial indicator for the request. Could also include an option for a tax harvest request

u Notification Date & Time mm/dd/ccyy; hh:mm:ss Date & Time that the message sent by Sponsor.

u Date & Time mm/dd/ccyy; hh:mm:ss Date & Time that the message received by IM.



FC/ Broker Name FC/ Broker Name FC/ Broker Name & possibly contact info for reference

FC/ Broker Phone Number (xxx)xxx-xxxx Contact number for follow-up discussions



• Custodian Designation Required if different from sponsor firm

Client name B/D client name Client Name requesting the $$

Market Value of Transaction (+/-) $$$,$$$ Total Market Value of Withdrawal/Deposits

Completion Date Date (mm/dd/ccyy)

Default = Transm. Date

Date funds need to be available (withdrawal) or traded (contribution)



FIELD NAME FIELD ENTRY DESCRIPTION Funding Type Cash, Securities, or Cash &

Securities Indication of what type of assets the funding/distribution will be in

Comments Alpha/numeric Open text field for special instructions (ie – “tax sensitive” requests, next day settlement, etc.)

u CUSIP # ID 9 digit # US currency based transactions. For both cash withdrawal and fees, the cash amount is indicated by the cash holding. CUSIP is not required for the cash holding; Ticker should be used. Refer to Ticker explanation.



u Ticker ABC Cash withdrawal & fees, the cash amount is indicated through the cash holding; The Ticker is required in the cash holding case and should be defined as “CASHTICK”. In the case of a security withdrawal (deliver out), the Ticker is used as a 2nd security identifier.


Coupon Date mm/dd/ccyy For Fixed Income only – Coupon due date

Dated Date mm/dd/ccyy For Fixed Income – Start Date for accrued int.

Maturity Date mm/dd/ccyy For Fixed Income only – Principal due date


Factor Date mm/dd/ccyy For Fixed Income – Factor Date of security

Original Face $$ For Fixed Income only – Face Value at issue





u Position Total Market Value $$ Market Value Total Current Market Value

(For Each tax lot)





FIELD NAME FIELD ENTRY DESCRIPTION u Valuation price Current Mkt Price Current valuation for the security



2a. Acknowledgement: Withdrawal Notification • Data input from: IM or via IM service provider • Data output to: Sponsor or Sponsor service provider, Custodian





u Sponsor Firm Sponsor Code Industry accepted code for Sponsor Firm (for routing purposes)




2b. Accept / Reject: Withdrawal Notification • Data input from: IM or via IM service provider • Data output to: Sponsor or Sponsor service provider, Custodian



u Original Request Received Date & Time mm/dd/ccyy; hh:mm:ss Date & Time W request notification received by IM









• Reject Code See Reject Code Tables


Commit Date Date (mm/dd/ccyy) Date the IM has Committed to completing the activity


B3. Notification: Account Termination

• Data input from: Sponsor or via Sponsor service provider • Data output to: IM or IM service provider, Custodian

FIELD NAME FIELD ENTRY DESCRIPTION u Notification Type Account Termination Notification Type code table

u Notification Date & Time mm/dd/ccyy; hh:mm:ss Date & Time that this message sent by Sponsor

u Date & Time mm/dd/ccyy; hh:mm:ss Date & Time this message received by IM, Custodian




Sponsor Firm Contact J.Quartuccio

• Phone (xxx)-xxx-xxxx



u Termination Instructions TK Liquidation Table Codes

• Partial Liquidation Instructions: Full detail including # shares & CUSIPs



FIELD NAME FIELD ENTRY DESCRIPTION u Reason for Termination mgmt change Comments

• Selecting Another IM Y Y/N (a Y response requires New IM to be filled in)

• New IM: FSZ Enter if the client account is terminating due to a request for Management Change

Holdings information starts: This information should be included for the “MPL” termination instruction.

u CUSIP # ID 9 digit # US currency based transactions. Indicates the CUSIP of the holding to be liquidated. Each holding to be liquidated should include this “Holdings information” data.



Ticker ABC The Ticker is used as a 2nd security identifier.


Coupon Date mm/dd/ccyy For Fixed Income only – Coupon Due Date

Dated Date mm/dd/ccyy For Fixed Income – Start Date for Accrued Interest

Maturity Date mm/dd/ccyy For Fixed Income only – Principal Due Date


Factor Date mm/dd/ccyy For Fixed Income – Factor Date of Security

Original Face $$ For Fixed Income only – Face Value at Issue




u Position Total Cost $$ Cost Total cost of the position to be liquidated

u Position Total Market Value $$ Market Value Total Current Market Value of the position to be liquidated

(For Each tax lot)





FIELD NAME FIELD ENTRY DESCRIPTION u Valuation price Current Mkt Price Current valuation for the security



3a. Acknowledgement: Account Termination Notification • Data input from: IM or via IM service provider • Data output to: Sponsor or Sponsor service provider, Custodian



u Original Request Received Date & Time mm/dd/ccyy; hh:mm:ss Date & Time AT request notification received by IM


u Sponsor Firm Sponsor Code Industry accepted code for Sponsor Firm (for routing purposes)




3b. Accept / Reject: Account Termination Notification • Data input from: IM or via IM service provider • Data output to: Sponsor or Sponsor service provider, Custodian



u Original Request Received Date & Time mm/dd/ccyy; hh:mm:ss Date & Time AT request notification received by IM









• Reject Code See Reject Code Table


u Confirmation of Instructions TK Liquidation table

IM Contact D. Smith The contact at the IM firm responsible for the Accept or Reject of the Account Termination Request

• Phone (xxx)xxx-xxxx IM Contact's phone number



V. Tables

• Notification Type Codes

Code Description

AT Account Termination

ATT Authorization To Trade

DF Deposit Funding

NAF New Account Funding

NAP New Account Profile

W Withdrawal

• Account Type Codes

Code Description

COR Corporation

ENI Endowment – Incorporated

ENU Endowment – Unincorporated

EST Estate

IND Individual

IRA IRA

IRO IRA Rollover

ITR Irrevocable Trust

JNT Joint

KEO Keogh

LLC Limited Liability Corporation

LPA Limited Partnership

LTR Living Trust

MUN Municipalities

NRA Non-Resident Alien

OFF Offshore

OTH Other

PAR Partnership


Code Description

PEP Pension Plan

PIN Personal Investment

PSP Profit Sharing Plan

RRA IRRA

SEP Self Employed Plan

SPR Sole Proprietorship

TRU Trust

UGM Uniform Gift to Minors Act

UNI Unicorp. Organization/Association – Incorporated

UNU Unicorp. Organization/Association – Unincorporated


• Reject Codes

Code Description

1. Below Minimum Account Size

2. Excessive Restrictions

3. Incomplete / Inconsistent

4. Invalid Information

5. Investment Policy Sponsor

6. Missing Required Data

7. Not Suitable For Investment Strategy

8. Other. Notes section of response form must be filled in

9. System Not Ready

10. Trade Not Allowed on Account

11. Unknown Account

12. Unknown Source Code

13. Unknown Sponsor / Source

• Liquidation Codes

Code Description

TK Terminate & Keep

SLQ Sponsor Liquidation

MLQ IM Liquidation

SLP Sponsor Partial Liquidation

MPL IM Partial Liquidation


Glossary

Custodian Designated by the Sponsor to settle all transactions, and update client records with respect to changes in stock or bonds, cash flows, corporate reorganizations

Financial Advisor (FA) The primary distribution for the SMA industry. The first point of contact for investors. In most cases FAs are Brokers that are either in-house (on the payroll) at the Sponsor or are contracted as independent representatives. In their advisor / consultant role, Brokers are compensated with advisory fees rather than sales commissions.

Financial Consultant (FC) See “Financial Advisor”.

Institutional SMA Sold by IMs or the wirehouses and is geared toward corporations, pension plans, etc. Often the account mirrors a particular mutual fund or hedge fund and is managed by that fund’s manager. The primary ‘buyer’ of these accounts are corporate investors or pension plan administrators and the minimums exceed $1 million.

Investment Company Institute (ICI) The national association of the American investment company industry. Founded in 1940, its membership includes 8,928 mutual funds, 499 closed-end funds, and six sponsors of unit investment trusts. Its mutual fund members represent nearly 89 million individual shareholders and manage approximately $6.9 trillion.

The Institute represents its members and their shareholders in matters of legislation, regulation, taxation, public information, economic and policy research, business operations, and statistics.

Investment Manager (IM) Providers or manufacturers of the investment process for the client. To participate in a Sponsor’s program, an IM will enter into separate “master” agreements for each program and are subject to annual due diligence review meetings from the Sponsor.

Managed Account (MA) A professionally managed portfolio of individual securities.

Money Management Institute (MMI) The national organization for the managed account industry, representing portfolio manager firms and sponsors of investment consulting programs.

The MMI was created in 1997 to serve as a forum for the managed account industry's leaders to address common concerns, discuss industry issues


and work together to better serve investors. The Institute is the leading advocate for the industry on regulatory and legislative issues.

Multiple Discipline Products (MDP) Accounts that employ a multi-manager methodology in bringing the benefits of the managed account approach.

Multiple Strategy Portfolios (MSP) An alternative name for accounts that employ a multi-manager methodology in bringing the benefits of the managed account approach.

Mutual Fund Wrap Mutual funds are the sole the investment vehicle. The mutual fund wrap is sold by mutual fund companies, (often using their own mutual fund products) financial advisors and registered investment advisors and brokers.

On-line Managed Account Investors can build their own target portfolio that includes stocks, mutual funds and bonds. Usually little or no advice is provided and fees for brokerage and custody are bundled into the account charge.

Separately Managed Account (SMA) A composition of securities (including stocks, bonds, mutual funds, commodities, etc.) which represent a particular target investment style, that is selected based on a particular investor’s profile or financial goals.

Separate Account A pooled fund created by an insurance company which is segregated from the general funds maintained by the company for the purpose of paying claims. Separate accounts invest in a variety of securities and funds and often contain retirement funds.

Sponsor Brokerage firms that establish relationships with Custodians and select Investment Managers (IMs) by their investment styles. They perform ongoing due diligence to determine the IM’s participation level in their programs.

In most cases, Sponsors create separately managed account programs as enhanced services for their clients, contracting independently with each as a co-advisor with fiduciary responsibility. In some cases Sponsors create the framework for the SMA programs as a service for either clearing firms or independent financial consultants.

Tax Aware Account Considers an investor’s tax bracket and investment goals and utilize and time trading in order to limit tax exposure. This capability is geared toward ‘high-end’ SMA investors (above $250,000).

Separately Managed Accounts Operations Communications and ...

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