Product Watch
A Black Box for Funds
With market-timing and late-trading scandals shining the spotlight on mutual-fund pricing practices, Trema has introduced NAV Monitor, a tool that can calculate the net asset value (NAV) of a mutual fund in real time.
Rather than price funds once a day, "This is allowing you to do it throughout the day," says Jeffrey Smith, director of account management in Trema's asset-management sector, based in Boston.
Similar to the function of a black box on an airplane, NAV Monitor creates a real-time audit trail of transactions and subscriptions by investors that can expose any discrepancies between the fund unit value and the time of the subscription. With regulators eyeing an earlier cut-off for pricing funds, the tool simplifies fund managers' compliance efforts. "We're attempting to give fund managers more flexibility to address future technology challenges," says Smith.
NAV Monitor's time stamps clearly note exactly what time a trade came in, and fund managers can price the fund accordingly, making the handling of late trades less ambiguous. If a trade comes in after the cut-off, NAV would identify the late trade through the time stamp and prevent the manager from executing the transaction that day. The transaction would be completed the next day at the new day's price.
In terms of deploying NAV, a firm could provide different views of its fund data to internal operations staff than it does to third-party administrators. Or it could set up one portal for retail investors for purchases and redemptions, and a second portal for institutional clients that have the authority to buy and sell on the system, Smith says.
The module works with Finance KIT, Trema's advanced fund-management system.
www.trema.com, 617-757-8900
Ivy is Editor-at-Large for Advanced Trading and Wall Street & Technology. Ivy is responsible for writing in-depth feature articles, daily blogs and news articles with a focus on automated trading in the capital markets. As an industry expert, Ivy has reported on a myriad ... View Full Bio
Tweet This