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Matrix Levels

A matrix level is the level of control on a sub-account provided to a Firm or Fund using Networking. The matrix level chosen by a Firm determines the activity allowed between a shareholder and a Fund. Each matrix level: 

  • Provides Firms with the flexibility to select options consistent with their business philosophy
  • Identifies the:
    • Reporting responsibilities of the Firm and Fund with regard to each sub-account
    • Processing capabilities the Fund and Firm have in supporting the exchange of information for those sub-accounts

  pdf Matrix Level Guide (466 KB)

 

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 Networking offers several levels of reporting, each one referencing different levels of account responsibilities for Firms and Funds. 

Note: Levels of responsibility and user privileges can be changed depending on the specific needs of the Firms and Fund companies.

Definition

The matrix level is the level of control on a sub-account provided to a Firm or Fund using Networking. The matrix level chosen by the Firm determines the activity allowed between the shareholder and the Fund.
There are three current matrix levels:

  • Level Zero = Non-Networked Account or a Networked Trust Account when used in conjunction with a Trust Membership Indicator
  • Level Three = Firm Controlled Account
  • Level Four = Fund Controlled Account

 

Description of Networking Matrix Levels

The table below describes each of the three matrix levels of Networking.

Networking Level Name Description
0 (zero) Non-Networked Account

For most Firms, Level 0 means non-Networked.

Exception: A Networked Trust Account is considered Level 0 if the Membership Indicator denotes a Trust.

3 (three) Firm Controlled Account Firms maintain maximum control over the mutual fund assets in a customer’s account including:
  • all customer contact
  • orders
  • customer statements
  • tax reporting
Note: Customers do not deal directly with the fund.
4 (four) Fund Controlled Account Firms allow the fund to maintain control over the mutual fund assets in a shareholder’s account.

Firms process a customer’s orders but the Fund provides all other services for the shareholder including all accounting and tax reporting.

Shareholders can deal with either the Firm or the Fund.
Trust Networked Account Trust Company Controlled Account Trust Company maintains maximum control over the mutual fund assets in a customer’s account including:
  • all customer contact
  • orders
  • customer statements
  • tax reporting
Note: Customers do not deal directly with the fund.
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Introduction

This topic contains information on shareholder reporting responsibilities.

 

Reporting responsibilities

The table below illustrates who is responsible for:

  • Producing confirmations
  • Preparing monthly and quarterly statements
  • Tax reporting for investors

 

Reporting Responsibility Level Three* Level Four Trust Networked */ **
Confirm (Fund/SERV® Trades) Firm Fund Trust Company
Confirm (Non-Fund/SERV®) Firm Fund Trust Company
Monthly Statements Firm Fund Trust Company
Quarterly Statements Firm Fund Trust Company
Year-End Statements Firm Fund Trust Company
1099D Firm Fund Trust Company
1099B (Wire Orders) Firm Fund (as-of 1/1/2012) Trust Company
1099B (Direct Liquidations) Firm Fund Trust Company
1099 R/W2P (When Applicable) Custodian/ Trustee Custodian/ Trustee Trust Company
5498 (When Applicable) Custodian/ Trustee Custodian/ Trustee Trust Company
1042S Firm Fund Trust Company
Proxies Firm/ Fund Fund Trust Company
Interested Party Mailings Firm Fund Trust Company


*Direct Liquidations are not allowed.

** Trust Networked accounts at the fund should not be subject to withholding. If withholding is appropriate, it should be applied by the trust on the trust's record-keeping system. The trust is responsible for filing and reporting.

Notes:
  • "Custodian" is defined as the financial institution acting as the caretaker for a mutual fund’s assets.
  • The tables found in this chapter should be used as a guideline. They are not a requirement of NSCC. They are the recommendations set forth by the participants of the Networking system themselves.
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Introduction

This topic contains information on Firm or Trust Company capabilities - activity.

 

Purpose

This table illustrates the basic functions that Firms or Trust Companies (for Trust Networked Accounts) can and cannot do under the various levels of Networking. These functions include:

  • Purchases
  • Liquidations
  • Exchanges
  • Transfers

 

Capabilities

Firm or Trust Company (for Trust Networked Accounts) capabilities are summarized in the tables below.

Note: If account is trust networked, only the Trust Company should submit the below listed transactions.



Function Type Level Three Level Four Trust Networked
Purchases Direct with Fund No Yes Yes
  Fund/SERV® Yes Yes Yes
Liquidations Direct with Fund No Yes Yes
  Fund/SERV®
Yes Yes Yes
Exchanges Direct with Fund No Yes Yes
  Fund/SERV®
Yes Yes Yes
Transfers Direct with Fund No Yes Yes
  Fund/SERV®
Yes Yes Yes
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Introduction

This topic contains information on the beneficial shareowner privileges with a Fund.

 

Beneficial Shareholder privilege table

The table below illustrates the shareholder privileges that are available for the various Networking levels.

Note: The beneficial shareholder does not refer to the Trust Company in this instance but the clients of the Trust Company.



Beneficial Shareholder Privileges with Fund Level Three Level Four Trust Networked **
Direct Purchases No Yes No
Direct Liquidations No Yes No
Direct Exchanges No Yes No
Direct Transfers No Yes No
Check Redemptions No Yes No
Systematic Withdrawals No* Yes No*
Pre-authorized Checks No Yes No
Dealer of Record Changes No Yes No
Account Executive Changes No Yes No
Dividend Option Changes No Yes No
Address Changes No Yes No
Payee Address Changes No Yes No

 

* Yes, if “Cash to Firm/Cash to Trust”.

** For Trust Networked Accounts, “No” means that only the Trust Company can process the privileges listed.

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Introduction

This topic contains information on Firm or Trust Company capabilities regarding account maintenance.

 

Broker or Trust Company account maintenance table

There are several non-trade related functions in Networking. The table illustrates which of these non-trade related functions Firms can perform under the various levels of Networking. These include:

  • Dealer of record changes
  • Account executive changes
  • Dividend option changes
  • Address changes
  • Payee address changes

 

Function Type Level Three Level Four Trust Networked
Dealer of Record Changes Firm through Networking No Yes No
  Trust Company through Networking N/A No Yes
  Firm to Fund Direct No Yes No
  Trust Company to Fund Direct N/A No Yes
  Fund through Networking No Yes Yes*
Account Executive Changes Firm through Networking Yes Yes Yes
  Trust Company through Networking N/A No Yes
  Firm to Fund Direct No Yes Yes
  Trust Company to Fund Direct N/A No Yes
  Fund through Networking No Yes Yes*
Dividend Option Changes Firm through Networking Yes Yes No
  Trust Company through Networking N/A No Yes
  Firm to Fund Direct No Yes No
  Trust Company to Fund Direct N/A No Yes
  Fund through Networking No Yes No
Address Changes Firm through Networking Yes Yes No
  Trust Company through Networking N/A No Yes
  Firm to Fund Direct No Yes No
  Trust Company to Fund Direct N/A No Yes
  Fund through Networking No Yes No
Payee Address Changes Firm through Networking Yes Yes No
  Trust Company through Networking N/A No Yes
  Firm to Fund Direct No Yes No
  Trust Company to Fund Direct N/A No Yes
  Fund through Networking No Yes No
Mass Dealer Change (branch, account executive) Fund through Networking Yes Yes Yes*



* Notification of a change made to the dealer/branch/representative information on a Trust Networked account by the Fund must be sent to the Trust via an F51 Fund Acknowledgement.

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