In response to our June “Cost Basis Reporting: Where Are We Now?” roundtable event in
I was joined by Alex Camargo, Analyst, Securities & Investment at Celent, during this pivotal point in the three year regulatory rollout, to further explore how the industry is planning to move forward with the phase 2 of the implementation of the cost basis reporting requirements.
Similar to our recent roundtable, we opened up a dialogue with key industry participants from leading broker-dealers, mutual funds, transfer agents, custodians and prime brokers to highlight the findings of the recent Celent research report, focused on understanding the current readiness of the industry, the remaining challenges, industry-wide best practices and lessons learned.
Basic observations that were discussed include highlighting some of the unanswered regulatory questions, in particular, around year three (2013) requirements, gaps in options and fixed income, as well as grey areas remaining for mutual funds and drips.
During the Webinar, Alex delved into the research findings divided by market segment and size, touching on some key trends and developments, including:
· Tracking and reporting wash sales and corporate actions
· Tax lot and sub lot identification and reconciliation
· Changes in lot selection
· Transfer reporting of cost basis when a client switches brokerages
A key part of this discussion was the post-2010 lessons learned, including:
· Firms shouldn’t anticipate the IRS pushing back the effective date with regard to mutual funds or bonds, so be ready.
· Communication is key and education or training of staff will be vital to ensuring clients stay well informed.
No doubt, there are still many unanswered questions and Scivantage and Celent continue to work diligently on behalf of the industry to bring to light additional pain points and opportunities that arise throughout this process. In fact, Scivantage hosts monthly cost basis working group discussions to hear Maxit clients’ concerns and address their needs.