Holding Up Systemic Risk Revolution? Credit Cards
December 11, 2012
And the funds don’t have credit cards, to make the payments. And, in many cases, each fund manager had to seek board or other approval to make the $200 payment, from fund assets, according to Cynthia Meyn, executive vice president of operations at the Pacific Investment Management Company, which operates a variety of mutual funds including the largest extant.
Each fund had to not just determine who would act as the counterparty that would register, but how to get the payment made.
This affected tens of thousands of mutual funds, Meyn estimated, more than 100,000 pension funds.
DTCC and SWIFT “retrofitted’’ the portal, divorcing registration and payment, Hodash said.
The answer: Getting funds to send payments by wire, from their custodian banks, for each registration.
The payment issue caused a “slowdown,’’ in registrations, Burns noted. But also slowing down the process was education: Taking an hour to explain what had to be done to each of thousands of fund managers, one at a time, Meyn noted.
That took man-years of work, Meyn said.
"That said, we overcame the challenge,’’ she said. "All of that complexity is behind us, now."
Until, she noted, next year comes around. And firms have to pay $100 to renew their registration for another year.