TPAs Fret about Fund Trading Compliance

September 13, 2004 ( - Retirement plan third-party administrators (TPA) head into the fourth quarter with serious concerns about their ability to comply to new rules including those regarding trading.

A news release said the study of more than 100 firms by McHenry Consulting and Gail Weiss & Associates found that TPAs are also interested in making sure they have robust enough technology available to them to do their job.

The study listed five TPA concerns:

  • continuing to be able to offer same-day exchange of mutual funds
  • the proposed hard close of trading as a response to fund trading scandal, which 66% said would have a great or significant impact. Nearly six in 10 said a hard close would require system changes on their part, which about a third said they expected to get at no charge and 17.4% predicted a cost of more than $100,000. Almost eight in 10 said they already had time-stamping capability for share trades.
  • sharing participant information with mutual fund companies
  • consideration of other investment vehicles instead of mutual funds if the alternatives came without redemption fees or trading restrictions. Half said they would consider making a change while nearly a third (27.8%) said they didn’t know. Some 68.2% suggested they might move to exchange traded funds while 63.6% would consider separate accounts.
  • the inability of current computer systems to track the age of transactions to judge the applicability of time-based redemption fees.

Responses were mixed when it came to the TPAs’ ability to block individual participant trades in the event of suspected market timing. Some 37% said they have that capability now, while 33.3% said they do not.

A copy of the report is at .