1 Canadian Western Trust 1
2 Canadian Western Trust CONTENTS: 1. Introduction.. 3 2. Opening Accounts... 3 3. Mutual Fund Automation... 3 4. The Intermediary s Role... 4 5. Execution of Various Transactions. 5 6. Commission Rebates.. 6 2
3 Canadian Western Trust INTRODUCTION: This manual has been prepared for use by the persons responsible for handling the mutual fund order entry for your firm. If your order entry is not done in house but is centralized elsewhere, please forward this information to the appropriate parties. All Mutual Fund Dealers using CWT as an intermediary must be guided by these instructions. CWT s Intermediary Code: AETN Contact at CWT: Client Services Team Informationservices@cwt.ca Call 604-685-2081 or 1-800-663-1124 www.cwt.ca Main Fax 604-669-6069, Mutual Fund Fax 604-699-4901 OPENING ACCOUNTS: When opening accounts at FundCos for clients at CWT, ensure registration appears as: Canadian Western Trust, ITF CWT Account Number and Client Name 600 750 Cambie Street Vancouver, B.C. V6B 0A2 Also, to ensure that your client will receive confirmation and other pertinent information from the FundCo, please enter client s mailing address in the Registration Information section. MUTUAL FUND AUTOMATION: Our systems and procedures have been designed to take best advantage of electronic file/transaction processing provided by FundSERV, to reduce as much manual processing as possible and eliminate duplication of effort by the dealer and CWT. Any intermediary settle transaction that is properly transmitted to us electronically from the mutual fund company, is not a chargeable transaction. This electronic transaction file must meet the standards established by the Mutual Fund industry itself, otherwise the transaction cannot be handled in an automated fashion and will be a chargeable transaction, please refer to the current CWT fee schedule for applicable charges. 3
4 Canadian Western Trust THE INTERMEDIARY S ROLE: What/ who is an intermediary? What does the Intermediary do? An intermediary is a financial organization, usually a bank, trust company or specialty manager of self-directed registered products (SDRSP), which holds assets in its own name on behalf of investors (beneficial owners). CWT ACTS ONLY AS AN INTERMEDIARY IN PROCESSING MUTUAL FUND TRANSACTIONS. CWT IS NOT ITSELF A MUTUAL FUND DEALER AND HAS NO FACILITIES FOR PLACING TRADES ON BEHALF OF AGENTS OR CLIENTS. The intermediary controls the movement of funds and assets within a plan and must be considered in every transaction. The intermediary role developed from the desire of many clients to diversify their portfolios beyond mutual funds as well as to consolidate holdings of many mutual funds into a single account. In its role as an intermediary, CWT does not initiate any direct interaction with the beneficial owner and generally deals only with the agent of record. We do not act as a back office in any way and can only deal with dealers who are able to place their own trades via their own order entry systems with the various fund companies (FundCos). The FundCos in turn deliver transaction information to CWT via FundSERV and our role is to settle these transactions where necessary. Where an intermediary is required to authorize a transaction before it can take place, the process takes longer to complete. This is due to the extra paperwork involved and the necessities of a third party handling and processing the transaction. Ownership of Assets When an intermediary holds mutual fund positions for the benefit of the investor, the intermediary is the registered owner of the mutual funds while the investor is the beneficial owner As the beneficial owner, the investor cannot directly sell the assets registered in the name of the intermediary. What is CWT s function as intermediary? Upon receipt of a new CWT account application form from the Dealer in good order, CWT will set up the new account and notify the dealer of the new account number. Where the Dealer has signed a Mutual Fund Trading & Settlement Agreement, CWT settles with settlement source indicator field coded I Records dividends, purchases, switches and redemptions on its system Sends quarterly statements (upon activity) to Dealers and Account Holders Processes transfer authorizations Processes de-registration (withdrawal) instructions sent by the Dealer with client authorization. Generates registered account receipts (i.e. contributions, withdrawals, RIFs, etc.) as required. Provides internet access to the Dealer & Client. 4
5 Canadian Western Trust EXECUTION OF VARIOUS TRANSACTIONS: Electronic Order Processing Manual Order Processing Rejected and Failed Orders Transfers in to New Accounts When placing a wire order, for CWT to settle, ensure the following information appears in the order: CWT intermediary Code: AETN Intermediary Account Number (Client CWT a/c #) Settlement Source: `I for intermediary Account Type: Registered / Non-Registered For any orders placed on FundSERV, we do not require any paper copies. Note: When a dealer places a `dealer settle purchase and remits the funds directly to the FundCo, the trade will be received and processed by CWT as a `contribution in kind. While it is possible for a purchase order to be coded for `dealer settle, redemptions coded this way will be rejected by FundSERV. On exception some transactions*, 10% free, switches, etc., may not be processed via a wire order. These exceptions may be faxed to CWT at 604-699-4901 by 11a.m. PST for same day processing. (* We ask that you request further details from your back office or contact the FundCo/Dealer Services for further information. Please refer to the current CWT fee schedule or contact our Client Services Team for any applicable charges) All FundCos who accept orders via FundSERV also provide reports to the dealer indicating trades that cannot be completed and are therefore rejected. Trades are usually rejected because there is something incorrect in the trade information. Dealer processing staff should ensure they are checking for rejected orders as these errors must be corrected by the dealer and reprocessed. A failed trade is one where the trade information was received but wasn t settled. The responsibility for resubmitting a failed trade and picking up any costs lie with the dealer. When completing a Transfer Authorization to transfer cash or `in kind to new accounts at CWT, please ensure that the new CWT account number is listed on the form. If the request is sent to a FundCo without a CWT account number, the funds will be registered incorrectly and the electronic information received by us and your back office will be incomplete. This could result in trading delays and incomplete CWT statement information. PACs Please fax client signed PAC authorization and void cheque to us at least 5 business days before the requested start date; our own CWT PAC request form or your dealership form will be accepted for this request. These will be authorized and faxed on to the FundCos to be set up. Void cheques are not kept on file at CWT, therefore all new requests should be accompanied by a copy of the void cheque. Required information on the form is the Fund number being purchased, the amount, when to start and the frequency, besides the client name, CWT account number and FundCo account number. The transaction will be a PAC Contribution In Kind on the client s statement. 5
6 Canadian Western Trust SWPs Non-financial changes Withdrawals From Clients Cash Accounts (Deregistrations) Requests should be faxed to us at least 5 business days before the first day of the month in which the RRIF(or other) payment is to be made to the client, to ensure sufficient processing time. Required information on the form is the Fund number being redeemed, the dollar amount or percentage breakdown, start date, frequency, client name, signature, and CWT account number. Dealer rep changes, address changes etc. must be authorized by us, the intermediary. These changes should be faxed to our office and we will provide our authorization and forward the requests to the FundCos. Please place a wire order to redeem the cash required for your client s withdrawal, taking into account applicable withholding taxes and CWT fees. When you place a net redemption with the fund company, it will be net of any DSC, however, that amount would then be subject to CRA withholding tax and CWT withdrawal fee. In order to place a redemption order sufficient to fund a net de-registration, you must gross-up the amount of the redemption. Once the redemption order has settled, we will do the withdrawal after receiving a fax request, on our own CWT RRSP/RRIF Withdrawal Request, signed by the client, giving details of the amount required and where to send the proceeds. COMMISSION REBATES: To Rebate From Dealer s Commission From A Mutual Fund Purchase Commission rebates should be attempted via wire order first*. If the Fundco requires additional documentation in order to process, forms should be faxed to CWT at 604-699-4901 before 11 a.m. PST. All forms received by CWT before 11 a.m. cutoff will be authorized and faxed to the Fundco on the same day. Please quote the client name, CWT account number, Fund account number, and commission rebate purchase wire order number on your form. (*We ask that you request further details from your back office or contact the FundCo/Dealer Service for further information.) To Rebate From Dealer s Commissions For fund companies that will not allow commission rebates via wire order, the dealer may send the rebate cheque to CWT along with a letter of direction to deposit the cash into the client account. The letter of direction should clearly indicate the client name, CWT account number, and the amount being that is being provided back to the client as a commission rebate. CWT will deposit the cash to the client account as a cash transfer in. This will ensure that cash is credited to the client account, and that a contribution receipt is not issued for this amount. Dealers can confirm through CWeb that cash has been deposited to the client s account and can then proceed to place a wire order to make the subsequent mutual fund purchase. 6