Chairman’s Review

2008/2009 was both a rewarding and challenging year at the AMF.

Steve Chittenden, Loomis Sayles, AMF Chair

The Asset Managers Forum is the leading operations focused industry group for asset managers and we cater not only to the interests of asset managers but also the organizations that work in conjunction with asset managers, i.e. custodians, utilities and vendors. Many of our initiatives pull together representatives from all these constituents, and to some extent counter-parties (dealers). We operate under the great tutelage of the SIFMA Asset Management Group, which has in a very short time distinguished itself as the voice of the buy side and the asset management industry’s go-to-source in connection with the many advocacy, legislative and regulatory issues that our industry is currently facing. We are also proud to be part of the larger SIFMA family and the connection with SIFMA helps with many facets of our business from representation in Capitol Hill to conference facilities to a wider name recognition.

The year 2008/2009 has been a challenging and rewarding year. The financial industry is going through a change stemming from the credit crisis and the larger recession that followed. The AMF fiscal year ends on October 31, 2009, so this is a good time to take a look at what we achieved in 08/09 and what remains on our plate into 2010.

Derivatives Operations
I would like to commend the work of the AMF Derivatives Operations Committee, and particularly the co-chairs of the Committee, Ila Eckhoff of BlackRock; Lara Gilman of Fidelity Investments; and Neil Wright of StateStreet. The Committee has held monthly meetings, which have enabled asset managers to discuss the key derivatives issues and helped disseminate information about the current derivatives operations environment and new protocols and practices, such as the “big bang” standardization of CDS contracts. The Committee has helped organize three major events related to buy side access to derivatives central clearing (3/20, 8/12, 9/10) and has organized updates and communication from the various CCP providers to the Committee. During the year the asset manager role and input into the OMG letters to the Supervisors has been broadened and strengthened. The Committee has also solicited asset manager participation in various industry groups, such as the OMG implementation groups for rates, equity, collateral, and novation processing. The Committee also supported the 3-Way Reconciliation Working Group, chaired by Matthew Hawkins of StateStreet IMS, which published a white paper in March 2009 and held a roundtable discussion in May. The ultimate goal is to improve the reconciliation process for better risk management related to derivatives. The AMF Derivatives Operations Committee will carry on strong into 2010 and continues to engage asset managers in the changes that are taking place to improve
derivatives processing.

TMPG Recommendations
Another important initiative this year was ensuring that the TMPG Treasury Fails Charge was implemented in a way that was feasible to asset managers and custodians. The Asset Manager and Custodian Working Group on TMPG Fails Charge, chaired by Paul Parseghian of Prudential, was created as a response to the TMPG Fails Charge recommendation. The working group helped asset managers and custodians address the questions related to the fail charge including workflows, responsibilities, process and systems changes. Because this initiative touched such as large amount of AMF and AMG members, the working group quickly grew very large and it was necessary to create a smaller focus group. Both groups met weekly for many months during the
spring of 2009, in fact, there were over 30 meetings during the time period from early March to May. The focus group drafted and released a white paper on industry procedures for the fails charge process for asset managers and custodians. The working group sponsored several industry-wide call-ins, and held three major Lunch and Learn events. Thanks to these efforts, the group was able to give feedback to the TMPG and influence the fails charge recommendation to include a minimum threshold for the fails charge and use the actual settlement day for the claims cycle. The working group also commented and was able to influence the TMPG
recommended closing time practices to make them more straight forward and uniform for all asset managers and dealers.

Corporate Actions
The AMF Corporate Actions Committee has been active since 2005. The Committee released a best practices white paper in 2006, and in 2007 and 2008, the committee worked on templates for complete announcement information for the most critical corporate actions types. These templates were handed over to DTCC which continues the work with additional template types. Recently SWIFT, DTCC and XBRL US joined forces to improve issuer to investor communications. They are first conducting an industry survey with asset managers to quantify the current cost of corporate actions processing and the potential benefit of issuers/agents using the eXtensible Business Reporting Language (XBRL). Once the survey is completed, SWIFT and DTCC intend to present
the findings to the SEC to solicit a requirement for issuers to use XBRL for corporate actions announcements. The XBRL data elements are aligned with ISO standards so that if and when the corporate actions announcements are tagged by issuers (and their agents) during the event announcement process, no additional data disclosure is needed, and the resulting XBRL data provides straightforward mapping into ISO standards. The AMF Corporate Actions Committee supports this initiative because it would ensure that asset managers receive accurate information in a more timely manner. It would also reduce the need to interpret and validate information, and would reduce the human and technology cost related to processing corporate actions. The Committee is in the process of submitting a letter to the SEC in support of this initiative.

Events and Training Program
The Asset Managers Forum sponsors numerous events and an extensive training program which are geared for asset management professionals and their professional development. Event topics are chosen to support our substantive agenda and to disseminate information about current, important issues. For your information, we have included a list of this year’s past events in this newsletter. Based on member input, we offered more short and focused events this year, such as lunch and learns and roundtable discussions, and training was conducted mostly via webinars. The AMF events not only serve to inform members about critical issues, but also provide an opportunity for networking. AMF members have built a camaraderie which makes it easier to attend our events and share information. We are currently designing next year’s event and training program and would appreciate any and all feedback and requests from AMF members.

Planning for 2010
The main goal of the AMF is to ensure that we address issues that are important to our member firms. I would like to encourage all members to share topics from the asset management industry that you feel the AMF should have on its agenda for 2010, whether it be in connection with trade processing or settlement, risk management, technology, regulatory changes, training, industry protocols, utilities, accounting, or something else that impacts asset management operations. We will naturally continue working on the initiatives that are under way, improving derivatives processing, and monitoring the effectiveness of TMPG recommendations.

Other issues that are on the agenda for 2010 are the changes for the tri-party repo market, improving operational risk management for MBS processing, pricing and valuation issues, and counterparty risk management tools and practices.

Review of FY 2009 Events

Looking forward, I am confident that AMF can continue to provide excellent value and service to the asset management industry.

Steve Chittenden
Loomis Sayles
AMF Chair