SUBJECT: ACATS-FUND/SERV CUSTOMER ACCOUNT NUMBER IDENTIFICATION MODIFICATIONS

During the fund and firm participant testing of the ACATS Redesign, an issue was discovered regarding the data passed to the fund in the Customer Account Number at Fund field. The resolution to this issue will require receiving and delivering participants to change the Book/Physical Share Indicator on the asset (AT) record and on the Fund Registration (FR) record. The actual implementation date will be announced shortly.

Description of Issue

Prior to the redesign, the delivering firm supplied on the mutual fund asset record a customer account number and specified whether this number was the Broker Account Identification Number (BIN) or the Fund Account Identification Number (FIN). In an attempt to reduce fund rejects in the redesign, NSCC provided the capability for the funds to receive two individual fields. On the Fund/SERV registration record sent to the funds (record type 018) there are now separate fields for the FIN (Customer Account Number at Fund) and the BIN (Customer Account Number at Firm) for both the receiver and deliverer. The customer account number indicator was eliminated.

The ACATS redesign automatically placed the TI customer account number (deliverer/receiver) in the Fund/SERV registration record (record type 018) Customer Account Number at Firm field (deliverer/receiver) that is sent to the funds.

During testing the following issues were discovered:

• There are some firms that modify their customer account number by placing either a prefix or suffix onto their internal customer account number when communicating with funds.
• ACATS now removes special characters and left justifies the TI customer account number (deliverer/receiver).

Because of these practices, the BIN is being passed incorrectly to the fund. The ability to pass to the fund on the Fund/SERV registration record (record type 018) a firm account number that is different from the TI customer account number was not accommodated in the redesign.

• The Book/Physical Share Indicator has been expanded to allow indication of BIN or FIN.
• The Fund/SERV Customer Account Number is mandatory input on the Asset Transfer (AT) and Fund Registration (FR) records and will be the BIN or FIN as known by the fund.
• A new output field will replace one byte of filler in the Fund/SERV Statistics (F) file to indicate that the Customer Account Number returned from the fund is a BIN or FIN.
• There are no Fund/SERV changes; Mutual Funds will not be required to make any modifications.

Modifications to the Book/Physical Share Indicator

A new value will be added to the Book/Physical Share Indicator. Currently the values on both the asset record (AT) and Fund registration record (FR) are:

1 = Transfer in and out book shares
2 = Transfer in book shares, transfer out physical shares.

New values on the AT and FR record will be:

0 = Transfer in and out book shares; Broker account number (BIN) is supplied on the Fund/SERV Customer Account Number.

1 = Transfer in and out book shares; Fund account number (FIN) is supplied on the Fund/SERV Customer Account Number.

2 = Transfer in book shares, transfer out physical shares; Fund account number (FIN) is supplied on the Fund/SERV Customer Account Number.

Please note: The input record lengths are not expanded. These changes apply to all ACATS participants. These new values are not applicable to the funds. The funds will continue to get the old values of "1" (Transfer in and out book shares) and "2" (Transfer in book shares, transfer out physical shares) in the Book/Physical Share Indicator. The new value of "0" will be passed to the fund as a "1".

Fund/SERV Customer Account Number Becomes a Required Field

The field named Fund Customer Account Number on the input Asset Transfer (AT record) will be renamed to Fund/SERV Customer Account Number - Deliverer. The field named Fund Customer Account Number on the Fund Registration (FR record) will be renamed to Fund/SERV Customer Account Number - Receiver. These fields will now be required fields. The firm must specify either the BIN or FIN customer account number as the fund recognizes it, i.e. pass the account number with any special characters or dashes. The ACATS participant will populate these fields with the BIN or FIN as indicated on the Book/Physical Share indicator.

A New Field Is Added to the ACATS Fund/SERV Statistics (F) Output File

The field named Fund Customer Account Number on the Fund/SERV Statistics (F) file will be renamed to Customer Account Number at Fund (Receiving Firm.) A new field, Customer Account Number at Fund Indicator (Receiving Firm), will be added to the Fund/SERV Statistics (F record) to indicate if the Customer Account Number at Fund (Receiving Firm) is a FIN or BIN. A "1" will indicate Fund (FIN) and a "2" will indicate Firm (BIN). This new field will replace one byte in an existing filler field and does not require a record expansion.

The ACATS system will pass the data to the fund in the following manner:

Please see Appendix A for another way to view the way ACATS will process the Book/Physical Share Indicator.

 Revised Record Layouts

The Asset Transfer (AT) and Fund Registration (FR) input records from the ACATS redesign have been modified. The corresponding fields on the output files (End of Day (E), Multi-Cycle (M), Position (P), and Settlement (S)) have also been modified. The Fund/SERV Statistics (F) file has been changed too. No modifications were made to the ACATS-Fund/SERV files that go to the fund.

Please see Appendix B for modifications to the following formats:

Section I: Fixed Length Layouts
Section II: Variable Length Layouts

All the ACATS and Mutual Fund Services record layouts can be found on NSCC’s Year 2000 file format web page at www.y2000.org/nscc. In addition, the ACATS formats can be found on the ACATS web page at acats.nscc.com. The ACATS-Fund/SERV user guide found on the fundserv.nscc.com and acats.nscc.com sites has also been modified to reflect this change.

 Test Plan

Fund and firm participant testing is on-going. Please refer to Important Notice A4854 dated November 11, 1998, for information on the participant ACATS system test. For a list of funds participating in the test please refer to acats.nscc.com.

Any questions pertaining to this Important Notice can be directed to NSCC's Participant Services Department at (212) 412-8432, NSCC’s Mutual Fund Hotline at (212) 412-8893, your account manager, or the undersigned at (212) 412-8843.

Barbara Simon
Director, Mutual Fund Marketing

The ACATS system would populate the corresponding account number fields on the 018 Fund/SERV record as follows:

If the FR.Book/Physical Share Indicator field is 1 or 2

Move the FR.Fund/SERV Customer Account Number – Receiver

Else

Move spaces

Endif

If the FR.Book/Physical Share Indicator field is 0

Move the FR.Fund/SERV Customer Account Number - Receiver

Else

Move spaces

Endif

If the AT.Book/Physical Share Indictor field is 1 or 2

Move the AT.Fund/SERV Customer Account Number – Deliverer

Else

Move spaces

Endif

If the AT.Book/Physical Share Indicator field is 0

Move the AT.Fund/SERV Customer Account Number – Deliverer

Else

Move spaces

Endif

Note: Typically funds expect a FIN number for delivering Network Level 0 accounts and a BIN number for receiving Network Level 0 accounts.