Yesterday, a press release entitled, "SunGard Selects J.P. Morgan Clearing Corp. to Add Access to Centralized Custody and Settlement Capabilities for Short-Term Cash Management," says, "SunGard is adding the ability for customers of its SGN Short-Term Cash Management multi-fund cash investment solution to access centralized custody and settlement services through J.P. Morgan Clearing Corp. The combination of SGN and J.P. Morgan capabilities will help provide cash investors with cost savings and operational efficiencies by accessing multiple fund providers through a single connection."
SunGard explains, "As the role of the corporate treasurer expands and increased cash surpluses place added pressure on corporates' short-term investment strategies, customers that maintain many fund provider relationships are looking to streamline their cash management operations. According to the Association for Financial Professionals' (AFP) Treasury Benchmarking Program: 2012 Survey, treasury in a majority of organizations has taken on a number of additional functions over the past five years, with at least two-thirds of survey respondents indicating that they are now responsible for 18 functional areas within the scope of their organization's treasury function. In addition, SunGard's recent cash management study revealed that 37 percent of corporates have increased their cash surpluses over the last year."
It adds, "To address these challenges, the consolidated settlement and custody offering available to SGN customers will help treasurers efficiently manage larger amounts of cash and focus on multiple responsibilities by helping to reduce paperwork and eliminate the need for multiple fund applications, while increasing choices for investing excess capital."
Joseph Triarsi, managing director at J.P. Morgan Clearing Corp., comments, "We welcome the opportunity to work with SunGard and provide services to support their worldwide network of corporate and institutional clients."
SunGard brokerage President Bob Santella adds, "By leveraging the clearing expertise, breadth of services and credit quality of J.P. Morgan Clearing, SunGard is able to expand its offerings to cash managers globally by further automating the short-term investment process. SGN helps cash managers be more agile and productive, by providing the tools they need to help improve workflows and reduce costs while helping to mitigate trade and credit risk."
SunGard also recently posted a "Viewpoint" blog, entitled, "Cash Investment Settlements: Custody or Fully Disclosed?. It asks, "Treasurers have choices in the way they settle their cash investment trades: the custody model, or the fully disclosed model. What are the main attributes of each model, and in what case would a treasurer or cash manager choose one model over another?"
SunGard's Vince Tolve answers, "Many treasurers are using platforms to help them transact business in institutional money market funds. The difference between the custody or net settlement model and the fully disclosed model is on the settlement side of these transactions. With the fully disclosed model, the transaction settles directly with the fund families. The net settlement model allows the company to settle the transaction via a brokerage account through a single connection."
He adds, "The fully disclosed, direct access model offers full transparency with the individual fund providers. This means customers maintain a direct account and access to their fund providers. The settlement occurs directly at the fund's transfer agent in the name of the underlying client. This model has many benefits, especially from a relationship perspective.... The custody model can enhance operational efficiencies by allowing cash managers to access multiple fund providers through a single brokerage account.... However, they need not choose one model over the other; the tools treasurers use should give them the flexibility to choose the access model or combination of these models to meet their specific cash management needs."
