In connection with the SEC's Money Market Reform proposal, DST Systems, Inc. respectfully submits our comments for your consideration.

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1 DST September 18, 2013 Ms. Elizabeth M. Murphy Secretary Securities and Exchange Cmmissin 100 F. Street, NE Washingtn, DC Subject: Mney Market Fund Refrm, File# Dear Ms. Murphy: In cnnectin with the SEC's Mney Market Refrm prpsal, respectfully submits ur cmments fr yur cnsideratin. Executive Summary DST is the lead transfer agency systems prvider serving the mutual funds industry fr ver frty years. The bjective f ur cmment letter is t prvide evidence t the Cmmissin with regard t cst impacts f the prpsed mney market refrm. Our reasn fr cmmenting is t highlight tw f the primary drivers within the prpsed refrm that cmprise a majrity f the ne-time systems csts invlved. We will limit ur cmments t Alternative One, with respect t Flating NAV. Frm a systems and peratins perspective these requirements are incnsistent with the nrmal functins f a mutual fund transfer agency system. -Rle in the Mutual Fund Industry prvides sphisticated infrmatin prcessing slutins and services t supprt the glbal asset management, insurance, retirement, brkerage and healthcare industries. DST's sharehlder recrdkeeping system is the largest third party recrdkeeping system in the U.S. mutual fund industry with 57% f the market f sharehlder accunts (Mutual Fund Service Guide, January 2013). Per Crane Data as f July 31,2013, tw f the tp three mney market fund managers in the industry are ur clients, with their sharehlder recrdkeeping and peratins being perfrmed using ur sftware platfrm. It is frm this rle in the mutual fund industry and perspective that we feel cmpelled t prvide this cmment letter highlighting the cst impacts which prpsed refrm will have n systems and peratins. lntraday Pricing The accunting implicatins f the refrm will result in an implied expectatin fr funds t prvide intraday pricing. In practical terms, an accrual rate is determined nce per day in the current

2 Mney Market Fund Refrm, File# Page 2 envirnment. We are drawing an assumptin that it culd becme three distinct prices per day per CUSIP under prpsed refrm. lntraday pricing adds cmplexity t an existing high risk prcess, with billins f dllars rutinely in flight in a typical prime mney market institutinal player's accunts n a daily basis. The scale f mney mvement and vlume f underlying transactins prcessed within tight time frames wuld require even further precisin based n the time stamp f the trade. Flating NAV refrm, as written, wuld triple the level f daily servicing effrt and rughly triple the prcessing risk by intrducing cmplexities and recnciliatin requirements. Time stamp sensitivity-tracking ftrade time stamps arund market clse fr investr prcessing wuld need t be mdified t a higher level f standard f time cut-ffs within the day. Assuring accuracy and transparency f investrs receiving the prper time stamp is further exacerbated by mnibus accunting. The versight mdel in place fr Funds is delicate, at best, with multiple levels f intermediaries and servicing mdel cmplexities prevalent in the industry tday. Additinal strage and reflectin f price per day-transfer agency and ther sharehlder recrdkeeping systems wuld need t be mdified t cllect, verify and stre mre pricing infrmatin per CUSIP then they d tday. There may als be a requirement t stre bth the furdigit NAV alng with the tw-digit NAV. Each line f sharehlder transactin histry will need t be enhanced in sharehlder recrd keeping systems t track these additinal data pints nt required fr all ther mutual fund prduct sharehlder transactins. Data transmissins-mdificatins, testing and maintenance wuld all be increased between mney market funds and their web f service prviders. The vlume f transmissins, mnitring and maintenance, and risk attributed t data hand ffs between the funds, their pricing agents, transfer agents and brker dealers thrugh the DTCC wuld be tripled. Adding cmplexity t mney mvement-the amunt f cash that mves electrnically n a daily basis with the mney market servicing structure is staggering. Billins f dllars mve daily between mney funds and their institutinal clients, fund custdy accunts and transfer agency perating accunts, and fund transfer agency perating accunts and the DTCC net settlement prcess with aggregated due t/due frm amunts netted between brker dealers and fund transfer agents. Adding anther layer f pricing assciated with these mvements based n time f day increases risk t an already cmplex, high risk and highly autmated ecsystem. The daily wrk f all mney mvements received and sent will need t be categrized by time f day and used t balance against sharehlder recrd keeping systems transactins priced based n their respective time stamps within the day. Recnciliatin-Intrducing additinal layers f prices per day adds significant cmplexity t balancing prtcls and internal cntrls required t adjust fr the increased risk. Crrective prcessing acrss time intervals within the same day will becme cmmn place with the multiple ptential pints ffailure between timeframes, transactin delivery mechanisms and systems/parties invlved. Risk management prcesses in place t plice trade date assignment wuld need t be expanded.

3 Mney Market Fund Refrm, File# S Page 3 Sharehlder media-cnfirmatins, statements, internet access screens, autmated respnse systems and accunt representative access mechanism all wuld need t be upgraded t present multiple prices fr the same day. Perfrmance calculatins, literature-lntraday pricing will add t the cmplexity f tracking perfrmance calculatins and tying t industry benchmarks. Fur-digit NAV It is ur cntentin that mst, if nt all, sharehlder recrd keeping platfrms supprting the mney market industry cannt presently calculate mney market r ther mutual fund sharehlder transactins ut t fur digits t the right f the decimal place. We d believe that mst, if nt all, platfrms are capable f calculating ut t three digits t the right f the decimal. This nuance in precisin carries a heavy cst in upgrading systems universally in the industry t accmmdate the requirement. Majr systems cnsideratins f a fur-digit NAV requirement are utlined belw. Transactin psting-all dllar transactins are presently runded t three-digit shares. The psting prcess wuld need t be updated and tested fr bth dllar and share transactins. This psting prcess is cre t ur recrd keeping system; the testing and cmplexity f this prcess will be vast. Data transmissins-mdificatins, testing and maintenance wuld all be increased between mney market funds and their web f service prviders. The vlume f transmissins, mnitring and maintenance, and risk attributed t data handffs between the funds, their pricing agents, transfer agents and brker dealers thrugh the DTCC wuld be tripled. Sharehlder media-cnfirmatins, statements, internet access screens, autmated respnse systems and accunt representative access mechanism all wuld need t be upgraded t present shares and NAV t fur digits fr the same day. Implementing Retail Exemptin f Flating NAV On page 107 f the prpsed refrm, csts are presented t establish separate funds, mdify systems and related prcedures and cntrls, and update disclsure in the prspectus/advertising materials and nging peratinal csts. -While the tpic f the apprpriate way t define retail cntinues t be carefully analyzed by industry players, it appears a cnsensus is frming amng ur clients t prefer defining retail based n the SSN r minimum accunt balance. Delineating retail versus institutinal alng either f these methds is nt presently part f traditinal transfer agent systems functinality. Systems and peratinal updates t incrprate a maximum accunt balance administratin and reprting system, r ther identifier, wuld be required. Implementing Flating NAV On page 126 f the prpsed refrm, csts are presented t mdify existing prcedures, cntrls impacted by the prpsal, including calculatin, cmmunicatin, transacting and reprting basis. If

4 Mney Market Fund Refrm, File# Page 4 assuming intraday pricing and calculating t the furth decimal place, we prject the fllwing cst drivers: The ability t stre three prices per day per mney market fund using a fur-digit NAV and calculate shares n mney market transactins t fur digits t the right f the decimal place is nt part f existing sharehlder recrd keeping systems in the mutual funds industry. Our clients have defined requirements t stre bth a fur-digit NAV alng with a tw-digit runded NAV. Traditinal systems d nt have existing features fr string multiple prices per day. lntraday pricing results in the need t mdify systems t be able t apply different prices intra day based n the time stamp f the trade, which des nt exist tday in transfer agency systems. Enhancements t supprt cst basis including wash sales als require systems enhancements. Sharehlder Cmmunicatins - Flating NA V On page 129 f the prpsed refrm, csts are presented assciated with prgrams and systems mdificatins t access infrmatin nline, thrugh autmated phne systems and n sharehlder statements and ther frms f media. Traditinal systems will need t be updated t prvide the applicable price in each line f sharehlder transactin histry. MMF Institutinal Sharehlder Systems Changes On page 135 f the prpsed refrm, csts are presented t mdify existing systems, prcedures and cntrls related t recrd keeping, accunting, trading, cash management, bank recnciliatin and training. Updates are required fr transmissins, including the DTCC. Optins t allw timestamps within a transmitted recrd t verride intraday time stamp-based prices applicable t trades received directly at the transfer agent are necessary.

5 Mney Market Fund Refrm, File# S Page 5 Cnclusin The aggregated ne-time cst estimate fr updating ur transfer agency sharehlder recrd keeping system is estimated t be $9,450,000. It is imprtant t cnsider that ur sharehlder recrdkeeping platfrm is ne f many in the industry that prvide servicing t the end sharehlder, particularly when factring in intermediaries. Csts f refrm culd be dramatically decreased by remving the fur-digit pricing feature and recnsidering the accunting requirements that result in intra day pricing. DST is available shuld the Cmmissin have additinal questins. We are als available t meet with the Staff in persn upn request. Please cntact Nick Hrvath at (816) r [email protected] at yur cnvenience. '~,~ Stephen C. Hley Chief Executive Office and President