Updated AMF Overdraft White PaperDocument Transcript
The Asset Managers Forum
Guidelines relating to Overdrafts
Aid to Public Comment
Date: February 28, 2008
These proposed guidelines are subject to review by all market participants.
Written comments are due by April 30, 2008, and may be submitted to George
Reis of The Asset Managers Forum staff at email@example.com. Please contact
George Reis at 212-313-1180 for additional information.
360 Madison Avenue ▪ New York, NY 10017-7111 ▪ P: 212.313.1000 ▪ F: 212.313.1018 ▪ www.theassetmanager.com
Table of Contents:
Asset managers are responsible for achieving the client’s investment objectives and to do so,
the asset manager today is actively managing the available funds in order to reach the
maximum return on investment. As the cash management process gets tighter and more
complex it creates instances of overdrafts at the client’s custodian bank. As a result, there is a
need for guidelines to reduce and deal with overdrafts.
Custodians send opening day cash forecast reports, intra-day cash balance reports and cash
transactions reports to assist asset managers in their cash management function. Many of these
reports are sent via automated messages or are available on their web site. These reports
should be used by asset managers in conjunction with their internal cash management system.
The Overdrafts White Paper’s recommendations are grouped under actions to be taken by
custodians, asset managers and the industry at large.
• The custodian recommendations center on daily multi-currency cash management
reporting with updates through the day, reporting of overdrafts using standardized
formats developed in conjunction with asset managers, daily reporting of overdrafts and
communicating sweep cut-off times. Also custodians and asset managers should open
lines of communication to resolve root causes of overdrafts.
• The asset manager recommendations encourage implementation of a comprehensive
cash management system to effectively project cash requirements by currency,
incorporate sweep cut-off times in the reporting system, research overdraft conditions
daily, on-board multi-currency clients to CLS, develop metrics on overdrafts and
encourage clients to communicate cash movements timely.
• The industry recommendations center on establishing a standard cut-off time of
settlement date minus one at 10AM for submitting netting instructions on FX trades and
establishing an industry minimum for claims on overdrafts.
At the February 2007 AMF conference “Hardball with the AMF”, asset managers and custodians
discussed how they can better serve their clients. One of the discussion topics was their
experiences in tracking and resolving overdrafts. Both parties felt the situation should be
explored in greater depth as to causes and resolution of overdrafts and to develop guidelines for
Several AMF members brainstormed the overdraft issues at a March 2007 AMF Roundtable
discussion and found great interest among asset managers and custodians to form a study
group known as the Overdraft Working Group. The co-chairs are Thomas Dara of BlackRock,
Jesse Robinson of Western Asset Management and William Filonuk, Bank of New York Mellon
with Gary Nussenbaum of Lord Abbett as AMF Steering Committee Liaison. The group’s
objective was to reduce overdrafts and the attendant processing costs, to reduce risk and
reduce costs associated with unintentional overdrafts at asset managers and custodians.
An integral part of an asset manager’s responsibility is a comprehensive cash management
process to ensure the client’s cash and securities transactions are accurately and promptly
recorded, properly invested and not overdrawn. In general, overdrafts in client accounts are
receiving more attention from a regulatory and compliance standpoint in part driven by
Sarbanes Oxley certification requirements. Asset managers are increasingly expected to
monitor and report on overdrafts and reimburse clients under certain conditions. To achieve
optimum investment of the client’s funds, the asset manager and custodian must interact closely
to avoid overdraft conditions.
An overdraft is a loan made by a bank to provide liquidity for unplanned events. Overdraft
loans are not meant to provide financing, nor are they meant to be used to create leverage in a
portfolio. Because of limits set by banks, regulators and the banks’ clients, a custodian bank
can not always offer an overdraft facility of sufficient size to fund an unplanned event -
particularly in markets that prohibit overdrafts. Therefore in the context of servicing investors
and asset managers, overdrafts are not a steady or important source of income to custodian
banks. Therefore they should be rare and should be avoided where possible.
Cash management practices differ from firm to firm. Some asset managers actively manage
their client’s cash balances (e.g. do not use bank sweep vehicles or money market vehicles)
therefore they should use rigorous cash forecasting processes to avoid overdrafts. Competitive
interest rates on idle cash balances can reduce or eliminate the need for active cash
Overdrafts may cause contention with the asset manager’s client because of the costs involved
and increased regulatory scrutiny. Clients have differing priorities and sensitivities, based on
account type and investment mandate. Some clients are willing to absorb an overdraft cost if it
is viewed as cost of doing business and generating investment returns, whereas other clients
have a mandate to completely avoid overdrafts. This is particularly true in certain international
markets, including Japan.
Overdrafts are resource-intensive for asset managers and custodians. Many asset managers
have a dedicated group focusing on trade settlement exceptions including fails, claims and
overdrafts, which require monitoring, tracking and initiating or responding to any related
charges, which is often a manual process. There is currently no industry solution or vendor that
offers an automated process for overdraft monitoring and tracking.
The main goals of the AMF Overdrafts Working Group are:
• Identify the most prevalent causes of overdrafts
• Recommend guidelines to minimize overdrafts by pro-actively avoiding conditions that
• Recommend guidelines to improve transparency and reporting
• Recommend guidelines for resolution of overdrafts
Asset managers and custodians need more transparency into the process to ameliorate the
causes, research the conditions and simplify the resolution of overdrafts. As custodians report
overdrafts in “real time”, the asset managers should actively research the cause of an overdraft
and resolve the cause in a timely manner. Additional goals of the working group are to promote
daily research and timely reporting of overdrafts and to develop industry metrics related to
3. Overdraft Causes
The Working Group identified 26 causes of overdrafts, which are listed on the table below.
Grouping Root Causes
AM Cash Management/Custodian Communication Client Cash Flows
Principal & Interest
Cash Forecasting Errors
Missing Trade Cutoffs
Missing STIF Cutoffs
Fees and Expenses
Active Cash Management
Fails Collateral / Margin
MBS Pool Settlements
Too Late to Turnaround
DK's -No Instructions
Dual Eligible Securities
Dealer Time Cut-off
Trade Processing Errors or Corrections Bank Errors
Trader Input Errors
Missing / Duped Trades
For this paper the Working Group focused on the causes which are most frequent or have the
most monetary impact.
The Working Group categorized the discussion of overdraft causes into three main sections,
namely: Custodian Communications, Asset Manager Cash Management Process and Industry
4. Custodian Communications
Custodians provide daily cash projections by market and currency, which is an essential
service for asset managers to properly manage client’s cash balances.
4.1 Cash Available Reporting
Ideally, the custodian should provide a real-time or near real-time cash projection as to the
expected close of cash settlements for a given market/currency. Within the projection there may
be unsettled items however as the business day unfolds there will be less unsettled items
enabling the asset manager to monitor the client’s cash positions and projected closing
balances. The daily cash projection should be updated throughout the day thereby tracking (a)
items that were surprises e.g. not included in the projection and (b) items that were not yet
settled. An integral part of an asset manager’s responsibility is to develop a comprehensive
cash management process and not to rely solely on the custodian’s information.
• A recommended guideline for custodians is to provide daily cash
projections each business morning and as all inclusive and straight
through during the day (based on significant dollar thresholds) to enable
asset managers to reconcile cash efficiently and better serve their mutual
• A recommended guideline for custodians should individually and as an
industry work with cash clearers in all currencies to improve
communication so cash is credited on accounts on as timely basis as
• A recommended guideline for asset managers and custodians is to work
together to develop a standardized Cash Availability Report as a daily
reconciliation between the overdraft report and the availability report
would result in explanations for overdrafts. The reconciliation should be
• Based on recommended standard report (above), the industry should
submit a request to International Standards Organisation to include the
new data elements.
4.2 Improved Reporting of Overdrafts
Reporting on overdrafts differs by custodians in content, format and timing. Also, differences
exist between client accounts that are contractual versus actual. It would be beneficial for all
asset managers if the format and content of custodian overdraft reports were as standardized
as practical regardless of currency. Custodian reporting is critical to identify the overdraft and
tie the overdraft balance to the underlying trade or transaction that caused it. The overdraft
charge should be identified also. Asset managers should reconcile to the custody overdraft
balances and not to the fund accounting records, which are on a trade date basis not settlement
date. More frequent reports (e.g. intraday or daily) would help the asset manager track and
research root causes. Asset managers would like custodians to notify them immediately when
an account is overdrawn or an unexpected flow is initiated by the client. Asset managers need
to be aware of the timing of posting of custodial fees to the account. There are items that
generally do not appear on the cash forecast which cause problems, such as corporate actions
and client cash withdrawals. This real-time notification would make it easier for the asset
manager to avoid overdrafts by prompting them to address the issues during the trading day.
Asset managers would also like next day reporting of overdrafts, which custodians say they do
currently provide, or are, in most cases, capable of producing. Custodians produce the reports
as batch jobs during the night so that they can then communicate cash balances daily. The
overdraft shows as a negative cash balance on the customer account. The account domicile
would naturally affect the timing of the report.
Based on a custodian report, the opening cash balance of the account might show an overdraft,
thus the asset manager becomes aware that the account is overdrawn and needs to raise cash.
Generally, the overdraft charge posts to the client account in the beginning of the subsequent
month. However, asset managers should assess the root cause on day one of the negative
balance and determine what caused the overdraft, whether it was expected or not, and who is at
fault (asset manager, counter-party, client or custodian). A summary report should be used at
month-end with reason codes next to overdraft charges to clarify particular charges.
(In the custodian reports, an overdraft is a debit interest item. As there are other debit-interest
items on the reports, asset managers need transparency on what the overdraft related debit-
interest charges are and what makes up the charges, i.e. the underlying daily overdraft
balances and related charge accruals that tie back to the charge.) Should this be deleted???
There may be several transactions that contribute to a daily overdraft balance and problem
transactions should be identified during the asset manager’s daily cash reconciliation process.
The asset manager also needs to know what is included in month-end client reports.
The custodian report should, at minimum, contain the following data points for each overdraft
• Date of overdraft
• Custody account name and number
• Cash amount
• Reason code
o Trade fail
o Unforecasted cashflow
o FX related
o Bank error
o Overspending by PM
o Corporate action
• Interest rate
• A recommended guideline is for asset managers and custodians to work
together to develop a standardized multi-currency Overdraft Report including
the above minimum data elements enabling the asset manager to efficiently
identify the specific transaction(s) causing the overdraft.
• A recommended guideline is for asset managers and custodians to develop an
automated reconciliation template between Asset Manager’sand Custodian’s
Cash Available Report
4.3 Short Term Investment Funds (STIF)
All major custodians offer beneficial clients short term investment funds (STIF) to sweep cash at
various timeframes throughout the business day to maximize the investment performance of the
client’s account. The STIF cut-off times cause a large number of overdrafts as cash related
transactions can occur after the cut-off time. The STIF cut-off times are dependant on the
custodian’s investment fund selected by the client, thus asset managers can not negotiate later
cut-off times. The STIF cut-off times will vary based on the type of money market fund selected
by the client plus the custodian’s lead time for posting asset manager transactions to the fund.
Each fund company retains the right to alter its trading deadlines. For example, a US
Government Fund might close at 1PM ET with a cut-off at noon whereas a general money
market fund of CDs and CP might close at 5:30PM with a custodian cut-off at 4:30PM.
In today’s competitive environment where clients face a proliferation of investment choices
including alternative investments, asset managers are seeking higher returns for their clients
across the board. This also leads to more aggressive cash management techniques as asset
managers need to optimize results. Asset managers are managing tighter tolerances of cash
liquidity which makes them more vulnerable to unexpected cash flows. The amount of liquid
cash is based on investment mandate, but the trend is that many client accounts have less non-
invested cash than heretofore.
At many asset managers, the STIF rates are presented to portfolio managers in the morning so
that they may decide whether to invest cash in these vehicles, repos or other investment
Asset managers need to be aware of these cut-off times and allow enough lead time for trades
to settle. The asset manager’s trading technology platforms (vendor or in-house) generally do
not have STIF cut-off times built into their systems so asset managers need to develop
alternative procedures to monitor cash movements effectively. When trading, portfolio
managers should be aware of the cut-off times and allow lead time for Operations to process
trades promptly to ensure that they are reported to custodian before the STIF cut off. It is
important for asset managers to receive custodian cash forecasts as early as possible so that
the account activity can be reviewed and adhered to the STIF deadline. Many custodians
provide multiple daily cash projections and cash balance reports enabling asset managers to
monitor cash balances and make better cash investment choices.
• Custodians should provide the STIF sweep rates to asset managers for the
client’s cash investments.
• Custodians should provide asset managers with updates whenever a cut-off
time changes as is currently done for holidays.
• Custodians should provide a periodic or quarterly report to all asset managers
of their complete STIF cut-off times including sub-custodians.
5. Asset Manager Cash Management Process
5.1 Cash Management Process
Asset managers prepare cash projections by currency for each beneficial client account at the
opening of the business day, which include the following:
A.M. Cash Projection report requirements:
• Opening cash balance (Current day)
o Current Settlement Date Activity (Including security ID and security description)
o Corporate Actions
o Principal and Interest payments
o Cash Flows (Client deposits / withdrawals or fund sub / reds)
o Holdings in STIF
o Less-Target Balance in STIF (optional)Equals Projected Investable Cash
Balance for current day
P.M. (as additional information is needed intra-day)
• Additional Intra-day activity posted not in the AM projections
NB: The Working Group is aware of a Cash Reporting draft paper in progress by ISITC’s
Reconciliation Working Group to update the business requirements and best practices for ISO
20022 electronic messaging between custodians and asset managers. The Working Group
recommends that asset managers review the ISITC business requirements to ensure that their
internal cash management system incorporates all these elements.
The asset manager would then obtain the custodian’s cash projections and validate the
projection with the custodians by comparing the documents and identifying material differences,
which should be researched internally and with the custodian. The asset manager’s cash
projection would be adjusted for the material differences (as would the custodian’s in order to
provide intra-day updates).
The asset manager would communicate the projected cash position to the portfolio manager so
they can start the trading day and invest the cash as per the client’s mandate in a custodian
STIF vehicle, or in another investment type such as repo, time deposit, commercial paper or
other short term instrument. Repo indications are given between 11AM and Noon ET.
The asset manager should monitor the custodian’s updated cash projections throughout the
business day. Differences might occur because of corporate actions, un-posted P&I credits or
adjustments, client deposits and withdrawals, turnarounds, foreign dividends paid in a currency
other than US dollars and cash practices of custodians on certain transaction types such as
Cash management processing supports both short term investment mandates and investment
of excess cash in long term portfolios.
• Asset Managers should encourage their clients to select STIF vehicles
appropriate for their investment parameters.
• Asset Managers should understand the STIF choices made by their clients as
it will impact their cash management process.
• Asset Managers should incorporate STIF cut-off times and rates (including
sub-custodians) into the asset manager’s cash management projection tools.
• Asset Managers should incorporate the client’s STIF cut-offs into the
investment management system including procedures to review the current
cut-off times at least quarterly.
• Asset Managers should educate the Portfolio Managers on STIF rates and cut-
5.2 Errors and Corrections
Whenever the asset manager or custodian recognizes an error requiring a monetary correction,
this information should be incorporated in the cash projections and communicated to the other
party especially if the amounts are material. Materiality (and tolerance levels) should be defined
by the asset manager and custodian based on the client mandates. The custodian should send
to the asset manager a notice of material monetary correction, automated if possible, so that the
adjustment can be included in the cash projection. Timely communication between the asset
manager and custodian of errors and corrections is extremely important to minimize overdrafts.
• A recommended guideline is for the custodian to send to the asset manager a
notice of any material monetary correction, automated if possible.
5.3 Improved Tracking of Overdrafts
Asset managers should track overdrafts and research debits daily by assigning operations
personnel to the task. Many custodians provide daily reports throughout the month listing the
overdrafts enabling research to commence immediately. Asset managers should not wait until
the custodian posts the monthly charges usually in the first few business days of the following
month because the overdraft condition could be 30+ days old making research difficult. Timely
research will enable the asset managers to take appropriate action to resolve the cause and
determine the responsible party for the charges. If the overdraft occurred because of asset
manager’s mistake such as sending the trade in late, or trade error, the asset manager would
typically reimburse the client for the charge. If the overdraft occurred because of a client activity,
the client would be responsible for the charge. If the overdraft occurred due to bank activity
such as a fail resulting from securities lending, the bank would be responsible for the charge.
Asset managers need to ensure that the report distribution has coverage in case of sick days
If the asset manager does not handle the overdraft research daily, they will have problems when
trying to research the reasons of the overdraft. Custodians typically debit the client accounts in
the first few business days of the following month for the accumulated monthly charges. The
recovery (compensation) of the charges would also take place at month-end.. The overdraft
tracking and research process should be a part of the asset manager’s daily cash reconciliation
system or process. Focusing on overdrafts daily will ease the resolution and possibly reduce the
charges as items (overdrafts) are being addressed in a timely manner.
The Working Group feels that the resolution of the overdraft should also be achieved during a
certain timeframe, at most within 30 days. A speedy resolution may depend on several factors
including the responsiveness of counterparty, trading volumes and other competing
• A recommended guideline is to encourage asset managers and custodians to
research overdraft conditions daily and to request daily reporting from their
• Asset managers should reconcile cash daily at end of the business day with
their custodians on a transaction level basis for each currency.
6. Industry Opportunities
The AMF and other industry groups are focusing on improving STP, reducing fails and
standardizing messaging between asset managers and custodians all of which seek to reduce
post trade processing errors, which can cause overdrafts. In this section, the paper highlights
several industry-wide issues causing overdrafts.
6.1 Foreign Exchange Trades
Many of the overdrafts are caused by international trades/FX. The FX related overdrafts are
usually fueled by incorrect standing settlement instructions or SSIs and time differences. The
monetary impact is high as different currencies have different borrowing rates hence cost of
funds can vary widely. When the client executes a sub-custodian agreement overseas, they
may not understand the actual costs involved trading in these overseas markets or the overdraft
rates charged by the sub-custodian.
In addition, overdrafts are caused by incorrect or late notification of gross versus net settlements
(pre-advisement may be sent that trade is to settle gross when it actually settles net), sub-
custodian cut-off time requirements, time differences in overseas markets and lack of pre-
matching FX trades. The cancel and correct process for FX trades may also cause problems as
adjusting trades may be difficult due to time differences.
One solution is the use of the CLS utility for settlement of third party foreign exchange
transactions. The CLS platform allows for pre-matching of FX transactions and provides for
settlement certainty. All transactions settle on a gross basis, which simplifies the trade
communication and settlement process. This largely takes out the settlement risk, and will
eliminate most FX related overdrafts. It should be noted that CLS settles in 15 currencies to
date with 2 more slated for the second quarter of 2008. (http://www.cls-group.com/index.cfm).
Asset managers should exercise care when trading FX given that many counterparties may not
be on the CLS platform. (Appendix A-lists the current dealer and custodian members on CLS).
While the roll-out of the platform is taking place, asset mangers and custodians should be more
diligent about having the correct SSIs related to international foreign exchange trades. Asset
managers could also monitor their counterparties as some are better than others in processing
FX trades. Timely notification of non-receipts from custodians on pre-advised money is critical
and would also reduce the number of overdrafts.
Another helpful development is that a variety of vendors are working to provide a pre-match for
FX trades, which might alleviate asset manager problems with failed trades.
• Encourage asset managers and custodians to work together to on-board
beneficial clients trading in multi-currencies to the CLS settlement service.
• Encourage a standard cut-off time of Settlement date-1 at 10 AM ET for
submitting netting instructions on foreign exchange trades.
• Asset managers should inform their portfolio managers of the CLS
membership, cut-off times by overseas market/sub-custodians and other
market nuances including regulatory issues.
6.2 Trade Fails
If a custodian is unable to deliver securities on settlement date the client’s cash account will not
have funds available to settle incoming dealer trade deliveries. There are many causes of trade
fails including security lending activities, dealer time, DK’s for money or quantity differences, too
late to turn-around, dual listed securities, etc. It is in the best interest of asset managers, dealers
and custodians to join with the AMF Fails Working Group and STP Committee to minimize the
causes of fails through streamlined processing initiatives, fail reporting metrics and better
• Fails Due to Incorrect SSIs
The AMF STP Committee is working to improve the quality of standing settlement instructions
(SSI). Incorrect instructions continue to contribute to a large number of fails which could be
avoided if the SSI information was accurate and timely. The STP Committee has requested
Omgeo to come up with a process to improve the data quality in the ALERT database (which
houses the SSI information), as well as establish an easier upload functionality of the SSI data
into the database. Omgeo is currently working on both items. The STP Committee is also
supporting the work of the ISITC Reference Data Working Group, which has documented the
essential SSI data elements in the DRAFT Standing Settlement Instruction (SSI) Best Practice
Guideline. The guideline will help industry participants agree on the standard minimum data
elements that are required to populate the SSI databases in ALERT and AccountNet (SSI
database operated by TradeWeb).
The settlement instructions for an account may be incorrect for different reasons. When an
institutional account changes its settlement instructions, the custodian sends an email message
to the asset manager with the updated information. However, if this email gets lost or the
information is not entered into the ALERT system by the asset manager, the ALERT database
will not get updated. This happens particularly with clients where trading is infrequent, or with
overseas clients. It is also possible that the counter-party, i.e. broker-dealer did not update its
portion of the ALERT database. Asset managers trade across multiple desks at any given
dealer. Each desk is responsible to maintain the SSI information for its asset class.
• A recommended guideline of the AMF STP Working Group is to urge Omgeo
and TradeWeb to adopt the ISITC Reference Data Working Group’s
recommendations regarding minimum standard data elements for SSI
• The AMF representing the asset management community encourages
custodians and vendors to work on uploading changes to settlement
instructions directly to the vendor SSI databases and will work together to
resovle the legal liability issues.
• A recommended guideline for asset managers should include the client
internal account number when communicating with the custodian and should
have correct payment instructions on file with the custodian to improve STP of
6.3 Industry Metrics and Benchmarking
Asset managers and custodians are encouraged to track overdrafts beginning in Jan 2008. The
Overdrafts Working Group is hopeful for a material reduction in monthly overdrafts between
January and December 2008. The Overdrafts Working Group will solicit anonymous overdrafts
volume figures in the last quarter of 2008 for compilation and distribution to the wider audience.
These are the suggested metrics:
Metrics Tracking (only for unintentional overdrafts)
• Amount of overdraft as a percentage of market value of client portfolio
• Number of overdraft occurrences
• Currency code
• Reason for overdraft
o Trade fail
o Unforecasted cashflow
o FX related
o Bank error
o Overspending by PM
o Corporate action
Effort involved to resolve High Medium Low
6.4 Best Practices for Overdraft Resolutions
The Working Group believes it would be helpful if there were consistent practices throughout the
industry regarding overdraft charges and their causes, particularly relating to fails and claims
related to overdrafts. While there is a common industry threshold of a $300.00 minimum claim
amount between dealers and asset managers, there is no existing guideline or minimum claim
amount for overdrafts. Asset managers noted that perhaps there should be a minimum charge,
if practicalble. Small overdrafts may ultimately cost the asset manager and custodian more in
resources than monetary credit realized for the beneficial client covered through the resolution
process. A minimum threshold amount would reduce the overall costs associated with research
and resolution of overdrafts for both custodians and asset managers.
For those clients who have no tolerance for minimum overdrafts threshold, the asset manager
may establish an error account to reimburse the client on small overdraft charges automatically
in order to save on the research and claiming process.
• The industry should work towards reducing the time and effort for clearing
overdraft charges including agreeing to a minimum dollar amount for
reimbursing clients for overdraft charges to simplify the research and
attribution by asset managers and custodians.
6.5 Overdrafts with Dealers
The Working Group believes that there would be much to gain by approaching the dealer
community to discuss overdrafts in order to reduce the instances of overdraft conditions
adversely affecting beneficial clients. This opportunity will be discussed in future meeting of the
Working Group and dealers will be invited to participate.
7. Communications Plan
After the Overdraft White Paper is reviewed and approved by members of the Working Group,
the communications plan will include:
• Prepare a press release announcing that the white paper is being distributed by AMF
to industry groups for public comment for a 60 day period and highlighting the
recommended guidelines applicable to the industry (February 2008)
• Arrange a Lunch and Learn to provide an explanation of the recommended
guidelines embodied in the White Paper and answer questions (March 2008)
• Arrange an in-person meeting with representatives of the custodian community to
discuss the recommended guidelines applicable to their peer group (March-April
• Arrange a meeting with interested buy-side firms to discuss the recommended
guidelines applicable to their peer group (March-April 2008)
• Collect comments and respond as appropriate (March-April 2008)
• Revise the white paper as appropriate (May 2008)
8. Implementation Plan:
The Working Group will focus on several recommendations for implementation including input
from custodians and industry groups, namely:
• Develop a standardized overdraft report with the custodian community
• Study the practicality of adopting an industry minimum for claims on
• Adopt a standard cut-off time of Settlement Date-1 at 10 AM ET for submitting
netting instructions on foreign exchange trades.
• Commence collecting metrics from volunteer asset managers and custodians.
• Engage the dealer community in a study of the causes of overdrafts
The AMF Overdrafts Working Group appreciates the time, effort and expertise by industry
professionals at asset managers and custodians that contributed to this initiative.
The Working Group will distribute this paper to industry participants to obtain feed-back on the
recommended guidelines. At the same time the Working Group will strive to obtain consensus
from the asset managers and custodians on the three items described above and move to
implementation as soon as possible.
After the public comment period is over, the Working Group will revise this document and
circulate the recommended guidelines to other industry groups for information and support.
The Overdrafts Working Group will continue to meet to implement the remaining
The Asset Managers Forum would like to thank all members for their contributions to this report
(list on Appendix B) and express particular appreciation for the efforts of the Overdraft Working
Group Co-Chairs, Thomas Dara of BlackRock, William Filonuk, Bank of New York Mellon and
Jesse Robinson of Western Asset Management and Steering Committee Liaison Gary
Nussenbaum of Lord Abbett.
CLS: FundFX service – participants as of February 2008
ABN AMRO Mellon IBT (via Citi)
Bank of Ireland (via UBS) Intesa San Paolo
Bank of Sal Oppenheim (via Credit JPM Chase
Suisse) Mellon (and CIBC Mellon) (*
Bank of New York (* Nordea
BHF Bank AG (via Citi) Northern Trust
Brown Brothers Harriman (via Credit Pictet & Cie (via UBS)
Suisse) State Street
National Australia Bank
Counterparty banks (Broker/dealers) live:
ABN AMRO Bank NL and US ING Bank NL
AIG International Inc US J Aron and Company US
Bank Julius Baer CH JPM Chase GB and US
Bank of America GB and US Jyske Bank, Silkeborg DK
Bank of New York GB (* Landesbank Baden-Wuerttemberg DE
Barclays Bank GB Lehman Brothers GB and US
BNP-Paribas FR Mellon Bank US (*
Brown Brothers Harriman US Merrill Lynch GB and US
Calyon GB Morgan Stanley GB and US
Citi GB and US Nordea Bank DK and FI
Commerzbank DE Rabobank NL
Commonwealth Bank of Australia AU Royal Bank of Canada CA and GB
Credit Suisse GB Royal Bank of Scotland GB
Danske Bank DK Skandinaviska Enskilda Banken SE
Deutsche Bank GB State Street GB and US
Dresdner Bank DE WestLB GB
Goldman Sachs GB and US Westpac AU
HSBC GB and US Zuercher Kantonalbank CH
Trialed but not yet live:
Northern Trust GB
Westpac Europe Ltd GB
(* - Bank of New York and Mellon Bank are in the process of merging. Until the completion of
the merger, the two institutions operate as separate entities in the CLS system)
Working Group Members
Jon Ambos Daniel Bozzo
Industry Participant New York Life Investment Management
Jason Cirrito Kerry Cocca
Goldman, Sachs & Co. Deutsche Asset Management
Sue Collazo Jeannine Cupen
State Street IMS Deutsche Asset Management
Michael Daley Thomas Dara
Loomis, Sayles & Company, L.P. BlackRock
Tina Davis Jean Ebbott
Mellon Global Securities Services Morgan Stanley Investment Management
William Filonuk Paul Fitzgibbon
The Bank of New York Mellon State Street Global Advisors
Janet Freed Thomas Gevas
Northern Trust Harborside Financial Center Northern Trust Harborside Financial Center
Robert Good Svetlana Grutman
Goldman, Sachs & Co. Lord, Abbett & Co. LLC
Lisa Hoffman Lisa Ilaria
State Street IMS New York Life Investment Managment
Thomas Kopkash Andrew Kornegay
State Street IMS Prudential Investment Management Inc.
John Ladd James Lignos
The Hartford Investment Management Co. State Street
Lena Loha Frank Lupica
State Street IMS Lord, Abbett & Co. LLC
Christopher Marzullo Michael McCarthy
Lord, Abbett & Co. LLC Lord, Abbett & Co. LLC
Omar Medina Joseph Ng
Goldman Sachs Asset Management The Northern Trust Company
Gary Nussenbaum Karisha Palma
Lord, Abbett & Co. LLC State Street IMS
Paul Parseghian Joseph Pomo
Prudential Investment Management Inc. Goldman Sachs Asset Management
Barbara Reda Jesse Robinson
Fischer Francis Trees & Watts Western Asset Management
Lisa Seibold Russell Stamey
State Street The Northern Trust Company
Mary Stone Catherine Tantillo
General Electric Investment Corporation Lord, Abbett & Co. LLC
Kevin Taylor Alex Woller
Lord, Abbett & Co. LLC Fischer Francis Trees & Watts