Institutional Cash Distributors, or ICD, is one of the largest players and earliest entrants in the online money market trading "portal" space. Crane Data interviewed the company in our most recent MFI and discussed the genesis and state of the portal marketplace, recent liquidity events, including since-assuaged concerns over Bear Stearns, and several new initiatives underway at ICD.
How did ICD clients react to the recent near-death experience at Bear Stearns? (Bear does clearing for ICD.) ICD's Jeff Jellison says, "We were able to get information to our clients right away, and provide them with detailed information on how their assets were segregated through Bear Stearns Clearing Corp. (BSSC) and never at risk. Our corporate treasury customers are very diligent.... All of us at ICD worked through the weekend to make sure our customers had as much detailed information as possible. At the end of the day, everyone just wanted to confirm what they already knew -- that their money was segregated and safe.
Mason Martin, Director of ICD Operations, offered an analogy: "For example, if ABC Fund Advisor were to go bankrupt, what would happen to the shareholders of ABC Prime Fund? Well, obviously, the money funds themselves are independent investment companies.... So those shareholders are protected from any balance-sheet activity of the parent. They own shares of the actual investment company. Similarly, our portal client assets have always been protected under the segregated clearing model, separate from the clearing agent's parent."
ICD recently launched an alliance with Clearwater Analytics to provide portfolio reporting to clients. Clearwater's accounting and compliance "will greatly improve ICD clients' Sarbanes-Oxley management processes." Clearwater and ICD are also pushing a transparency initiative to obtain daily or weekly portfolio holdings from money market mutual funds.
ICD's Ed Baldry says, "The marketplace condition is driving the need for transparency, because we live in a client-driven universe. Our whole mantra is to get them what they need and evolve in the most rapid fashion as a company. It's one of the advantages of a small company without a massive bureaucracy." For the whole ICD interview, see our most recent Money Fund Intelligence.
