Access Data Corp.

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NICSA West Coast Regional Meeting
November 18 2004
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Access Data

• Access Data is a specialty firm that works at the
  intersection of business and technology, enabling
  financial services companies to power their
  businesses
• Products and solutions for business intelligence
  and data warehousing for investment and
  shareholder information

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Evolution of Distribution Channels
85 of mutual funds are sold through third
parties
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Follow the Money
Client Investment 7T Fee 100 b.p.
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Transparency Challenge
Omnibus Net Flows
Disclosed Accounts 120 Million Accounts Non
Disclosed Accounts 140 Million Accounts
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The Regulators React

• Proposed Rules
• Disclosure of Taxpayer TIN information
• Sub-Accounting and Omnibus Disclosure Issues
• Late Trading Monitoring and Prevention
• Redemption Fees Application at T/A and Sub
  Account Level
• New CCO Position and Rules
• POS Mutual Fund Confirmations and Disclosures

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The Distributors Are Reacting

• Positioning
• Risk Liability Management
• Compliance is the joint responsibility of the
  mutual fund company and the distributor
• Fees stay the same sub t/a, services fees
• Impacts, Results and Technology Challenges
• Emerging support of transparency - Tax ID
  disclosure
• Making data accessible as useful information,
  previously not a concern.
• Collaboratively working to evaluate trading
  practices of their fund partners.

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The Manufacturers Must React

• Positioning
• Generally, its the distributors
  responsibility but, some firms are
• beginning to turn we want the data and it is
  a joint effort
• Impacts, Results and Technology Challenges
• Data Aggregation requirements all distributors
• Accounts, transactions, assets, products
• Firms, offices, reps, shareholder
• Channels Direct, WRAP, supermarket, retirement
• Business Intelligence Tools
• Data management rules to import data
• Business management rules to apply the data
• prospectus, organization, channels,
• Analysis rules to use the data
• trading history, client activity, patterns,
  alerts, prohibitions

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Attacking the Problem

• Status quo is not an option
• Access Data research conducted for our product
  development with top 25 mutual funds
• No third party tools existed to easily and
  reliably aggregate, transform, clean, assign, and
  report on all transaction data, including non-TA
• Firms existing technologies and business
  processes are IT concentric - unreliable and
  costly
• You cant get there with only traditional
  solutions
• Clean, controlled, and consistent data is key,
  always the biggest challenge for the shareholder
  operations areas
• Aggregation of multiple sources of transaction
  data for compliance monitoring
• Flexible business rules to adapt to emerging
  requirements my business changes, I must realign
  the data/information

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Emerging Environments
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Trade Frequency Market Timing Profile List
Compliance Rule 1 Trade Frequency. This screen
shows the rule parameters and description.
Allows the user to define his/her own parameters
(i.e. trade amounts, time frame, etc) to identify
shareholders moving in and out of a fund.
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Compliance Results

• Results Page
• Displays all accounts, which have violated one of
  the previously established compliance rules.
  Output includes the following details
• Platform (record-keeping) i.e. the fund TA,
  Supermarket, WRAP, etc
• Shareholder account number
• Fund Name
• Which Compliance Rule was violated
• The ACTIONS drop-down allows the user to view
  additional information such as
• Shareowner account history
• Dealer/branch office and rep name information
• Related account information (i.e. link other fund
  products by account or by TIN)
• Ability to add the account to a watch list for
  on-going reviews

Actions Drop down box
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Account DST 00000000100
Actions Drop down box
Rules violated
Related ownership by account or TIN
User has chosen the action button from the
Results Page to further investigate an omnibus
account flagged for violating the Deviation Rule.
User is supplied with specific date history
pertaining to the time period the Deviation Rule
was violated. By selecting the action button
in the above screen and choosing View Net Sales
Chart the system will provide a graphical
analysis comparing the omnibus trading volumes
against the fund NAVs for the time period the
deviation violation occurred.
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Transaction History
a
a
User has chosen the action button from the
Results Page to view transactional detail behind
a particular account flagged for violating the
market-timing rule. Shareowner account history
is displayed above.
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Daily Net Asset Value Deviation Analysis Market
Timing Profile List
Compliance Rule 3 Deviation Analysis Rule
parameters and descriptions are noted in this
screen. This rule is typically set for omnibus
accounts to detect trading activity beyond the
daily norm for a period of time as defined by the
user. It graphically plots the omnibus account
trading volumes and compares them with the funds
NAV for the same time period.
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Compliance
An omnibus account from the Results Page has
violated a Deviation Rule. User has chosen view
Deviation Detail from the action button and is
presented with the graphical analysis
above. Blue line represents the norm for omnibus
trading volumes over the defined period. Yellow
line represents 1 deviation away from the
norm. Red line represents 2 deviations away from
the norm.
Omnibus trading volumes
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Compliance
Fund NAV Movement
Corresponding fund NAVs are depicted in the
chart below thus allowing the user to consider
omnibus trading volumes against fund NAVs for
purposes of identifying suspicious trading
activities (i.e. buying prior to a NAV up-tick
selling prior to a drop in the funds NAV.
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Thank You
www.accessdc.com
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Looking Beyond a T/A Solution