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

Matrix Level Guide

 

Networking Level & Responsibilities

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

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.

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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