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DTCC Classification - Confidential (Yellow),

INSURANCE PROFILE - IMPLEMENTATION GUIDE

FEE & EXPENSE TRANSMITTAL & COMMISSION SCHEDULE TRANSMITTAL

PUBLICATION DATE:February 17, 2017

INSURANCE PROFILE – IMPLEMENTATION GUIDE

DisclaimersThe content, information and any materials (“data”) provided by DTCC and/or its affiliated companies ("DTCC") in this design paper is on an “as is” basis. DTCC expressly disclaims all warranties, expressed or implied, as to the accuracy of any data provided, including, without limitation, liability for quality, performance and fitness for a particular purpose arising out of the use of the data. DTCC shall not have any liability, duty or obligation for or relating to the data contained herein, any errors, inaccuracies, omissions or delays in the data, or for any actions taken in reliance thereon.

This design paper is proprietary planning materials of DTCC. Any unauthorized use, including but not limited to copying, distributing, transmitting or otherwise of any data appearing may violate the intellectual property rights of DTCC under any intellectual property laws such as copyright laws, trademark laws and communications, regulations and statutes. The data and information contained herein may not be reproduced, published or distributed to, or for, any third parties without the express prior written consent of DTCC.

DTCC CLASSIFICATION – CONFIDENTIAL (YELLOW) -3-


Table of Contents1 Introduction.............................................................................................................................5

1.1 Service Overview............................................................................................................52 Who Can Use This Service.....................................................................................................63 Process Overview...................................................................................................................6

3.1 Process Overview – Commission Schedule Transmittal (CST)......................................63.1.1 Commission Schedule Transmittal Participant Process Assumptions........................73.1.2 Commission Schedule Transmittal Processing Choreography...................................83.1.3 Commission Schedule Transmittal Datatrak and Autoroute & Output Cycles.............83.1.4 Commission Schedule Transmittal Load Process.......................................................9

3.2 Process Overview – Fee & Expense Transmittal (FET)..................................................93.2.1 Fee & Expense Transmittal Participant Process Assumptions..................................103.2.2 Fee & Expense Transmittal Processing Choreography.............................................113.2.3 Fee & Expense Transmittal Datatrak and Autoroute & Output Cycles......................113.2.4 Fee & Expense Transmittal Load Process................................................................12

4 Insurance Profile – User interface.........................................................................................135 Document Revision Updates – changes from baseline document drafted 10/31/2016........13



1 INTRODUCTION

On April 6, 2016, the Department of Labor (“DOL”) issued a new regulation (“DOL Fiduciary Rule”) regarding conflicts of interest in retirement investment advice.1 The DOL Fiduciary Rule generally expands the type of investment advice that is subject to fiduciary standards under the Employee Retirement Income Security Act of 1974 (“ERISA”). Generally, under the new DOL Fiduciary Rule, advisors subject to fiduciary standards will be limited in receiving certain compensation for providing investment advice. As part of the DOL Fiduciary Rule, the DOL also introduced a new exemption and modified existing exemptions to allow institutions to engage in certain compensation and fee practices that might otherwise constitute prohibited transactions under ERISA rules if the institutions meet certain requirements. Included in the new and modified exemptions are certain fee, expense and commission disclosure requirements for the fiduciary advisors.

The purpose of this guide is to explain how the DTCC Insurance Profile process works and the services supporting it. Accompanying this guide are several other related files. These include:

- Fee & Expense Transmittal (FET) Data Dictionary & Schemas- Commission Schedule Transmittal (CST) Record Layouts- Commission Schedule Type – Code Definition – Standard Usage- Commission Schedule Identifier – Standard Usage - Fee & Expense Transmittal – Fee Modeling Standard Usage- Commission Schedule Transmittal – File Processing Standard Usage- ACORD Life & Annuity Standard public schemas v2.37. For more information

contact ACORD at [email protected]. The public standards are available on their website at www.acord.org.

- For DTCC implementation questions, please visit our website at www.dtcc.com/insurance or contact your I&RS relationship manager.

1.1 Service Overview

Insurance Profile, the centralized data source of comprehensive and standardized annuity information will facilitate access to data critical to the management of and adherence to the DOL’s fiduciary disclosure regulations.

The data is focusing on the direct and indirect expenses including the commission schedule data for product level CUSIP. Insurance Profile service will offer insurance carriers a single source for their trading partners to access critical product data to assist in the generation of the disclosures required for the compliance to the rule. The service will cover fixed, indexed and variable annuity products.

2 WHO CAN USE THIS SERVICE

1 The new regulation is available at http://webapps.dol.gov/FederalRegister/PdfDisplay.aspx?DocId=28806.


http://www.dtcc.com/insurance

http://www.acord.org/

mailto:[email protected]


Insurance carriers, retirement plan providers, distributors, banks, and insurance agencies affiliated with distributors or banks and their solution providers are eligible. DTCC participants need to be full-service members of the National Securities Clearing Corporation (NSCC). In addition, special Data-Services-Only (DSO) memberships are available.

3 PROCESS OVERVIEW

DTCC’s Insurance and Retirement Services (I&RS) developed the Insurance Profile repository to allow Carriers to transmit and maintain timely updates of their standardized expense, fee and commission data. With I&RS providing this centralized standardized functionality, carriers and distributors both gain greater transparency to product level data. This access to data creates greater accuracy and confidence in the data validation process by providing a transparent process for insurance carriers. The distributors access data that is in support of DOL’s regulatory demands for greater oversight into certain compensation for providing investment advice subject to fiduciary standards.

Insurance Profile functionality supports two new files to communicate the required disclosure data. The Fee & Expense Transmittal is leveraging the ACORD TX Life 1241 message and is used to exchange product level fee and expense. The second file, which is the Commission Schedule Transmittal, supports the insurance carrier’s ability to deliver specific commission schedules at the product or policy level to their distributor trading partners. This is built leveraging the DTCC mainframe fixed format.

3.1 Process Overview – Commission Schedule Transmittal (CST)

Using a mainframe connection, insurance carriers or vendor on behalf of the carrier has the ability to electronically send their multiple and complex standard and custom commission schedules for annuity products. DTCC will process, store and if applicable, forward to their trading partners.

20 – Submitting Header – Mandatory21 – Contra Header – Mandatory

25/01 – Product Record – Mandatory25/02 – Commission Schedule Record25/03 – Commission Banding Record

All mandatory records are required to be present in each file. At least one occurrence must be present for the Submitting and Contra headers. In addition to one occurrence of the Product Record in each file submission or will be rejected by DTCC. Each file does however, allow for product records to be sent. Please review the CST record layouts for the most updated looping structure available and processing rules.

The Data Dictionary tab within the CST record layouts define each data element used within the file. Each data element is defined by:

Item Name Item Definition & Use Notes Allowed Values



Formats Element Usage (Mandatory/Optional/Optional – Conditional) System Code Record Type & Sequence number Start & End Position Location

The CST record layouts are used for development of the commission schedule transmittal file.

The DTCC record layouts present data in fixed length records that are 300 bytes long. All input data must follow the proper sequencing and looping structure diagrammed in the record layouts. The record layouts specifies looping structures, field definitions, field lengths, record types, field validation rules, data dictionaries and reject codes.

Please note that the use of optional fields will depend on participant requirements and arrangements between trading partners.

Additional validation rules are defined by industry working groups. Though some of the processing rules are not validated by I&RS systems, they represent the standard industry recommended processes and should be adhered to during development.

IMPORTANT: Follow these record layouts submitting your data to the system. NSCC follows strict edit criteria when editing these formats

3.1.1 Commission Schedule Transmittal Participant Process Assumptions

DTCC will only store only Product CUSIP level standard (also known as street) level commission schedules.

By populating “DTCC” in both the Contra Participant Number (item # 1001) and Associated Firm ID (item # 1010) on the 21 Contra record, DTCC will process and store the data in Insurance Profile.

If Contract ID is sent with DTCC in the Contra Header, DTCC will reject the transaction. DTCC does not supporting firm level trading relationships or access rules on Insurance

Profile. All submitted Product CUSIP level schedules will be available to all distributors. Insurance Carriers or vendor on behalf of carriers are eligible to be the submitting firm of

CST transactions. Standard usage and best practices are available on our website. Commission Schedule Identifier (item # 1017) located on the 25/01 Commission Schedule

record is used by the carrier to ‘link’ Product CUSIP level commission schedules to a contract being reported on the Positions and Valuations (POV) file. Please see standard usage document available on website to support the common usage.

CST date files will be delivered via CDTS in batch MRO files based on the frequency and updates by the insurance carrier. Upon receipt, DTCC will process and forward all accepted files to all CST users.

DTCC will offer each distributor two different ways to access the CST data. They are batch data delivery and/or a User Interface. The UI called Insurance Profile will allow distributors access to browse and view all Product CUSIP level standard commission schedules.


http://www.dtcc.com/wealth-management-services/insurance-and-retirement-services/user-group-information/product-client-center/user-group-information



Upon completing a Product Update Form (PUF), a distributor’s Super Access Coordinator (SAC) will be authorized by DTCC’s Registration Service Group (RSG) for Insurance Profile and CST data.

Carrier Families are supported within the CST process. Primary carrier family number may be able to submit business on behalf of their ‘child’ accounts. DTCC will track both participant numbers for audit purposes.

Upon submission of the Product Update Form (PUF), each insurance carrier will access to the Insurance Profile user interface based on two different role types:

Browse - the user will be able to browse and view data only. Modify – the user will have access to upload, browse/view, and delete data.

3.1.2 Commission Schedule Transmittal Processing Choreography

- Carrier submits Commission Schedule Transmittal data file (s) to DTCC.- At predefined cycle times throughout a business day, DTCC will batch process the

product record(s) received against format and validation rules.- Rejected records not passing format and/or validation rules will be transmitted back

to the original sender of the data file for corrective action.- Successful records passing format and/or validation rules will be queued for delivery.- At the CST output cycles, this is defined in the record layout document; DTCC will

batch and transmit successfully validated records to consumers (distributors) of the data.

- After each output cycles, DTCC will load data into the Insurance Profile tables for storage.

- CST records received by DTCC after the daily cutoff time will be pended and processed on the next available business day.

3.1.3 Commission Schedule Transmittal Datatrak and Autoroute & Output Cycles

The CST Datatrak (Inbound) SYSIDs and Autoroute (Outbound) product numbers are as follows:

Datatrak: 26411 (Production)46411 (PSE – testing)

Autoroute: 02342411 (Production)02982411 (PSE – testing)

All I&RS files have unique processing cycle schedules. For the CST the following cycle times will be followed. All of the listed times are Eastern Standard Time (EST).

ProductionOutput Time Destination Business Purpose of File1 6 AM Distributor / Provider Distributor Output / Provider Rejects2 10 AM Distributor / Provider Distributor Output / Provider Rejects



3 2 PM Distributor / Provider Distributor Output / Provider Rejects4 6 PM Distributor / Provider Distributor Output / Provider Rejects

Providers must submit CST file prior to Output time to be included in that cycle.

Test (PSE)Cycle # Output Time Destination Business Purpose of File1 6 AM Distributor / Provider Distributor Output / Provider Rejects2 9 AM Distributor / Provider Distributor Output / Provider Rejects3 Noon Distributor / Provider Distributor Output / Provider Rejects4 3 PM Distributor / Provider Distributor Output / Provider Rejects5 6 PM Distributor / Provider Distributor Output / Provider Rejects

Standard Commission Schedules that reflect DTCC in the Contra Header will be loaded each output cycle


3.1.4 Commission Schedule Transmittal Load Process

Upon receipt of the CST file where DTCC is the reflected as the Contra Participant firm, DTCC will process all accepted data into the database tables for storage.

Upon each output cycle, data will be inserted into the tables based on the following unique storage key for commission schedules:

o Carrier ID (CUSIP Owner’s NSCC participant number)o CUSIP Numbero Commission Schedule Typeo Commission Schedule Identifiero Commission Schedule Start Date

If the unique storage key is found, DTCC will delete all applicable data identified by the key.

The new data will be inserted into the tables. o Carrier ID (CUSIP Owner’s NSCC participant number)o CUSIP Numbero Commission Schedule Typeo Commission Schedule Identifiero Commission Schedule Start Date



3.2 Process Overview – Fee & Expense Transmittal (FET)

Using a mainframe connection, insurance carriers or vendor on behalf of the carrier has the ability to electronically send their Product CUSIP level fee and expense transmittals for annuity products. DTCC will process, store and forward to their trading partners.

The newly developed TX Life 1241 – Fee & Expense Disclosure Transmittal message is based on the ACORD Life and Annuity Standards, version 2.37.00, ACORD proves an open insurance industry XML vocabulary which defines a common, consistent view of insurance information. All messages herein are based on the ACORD Life Standards Data Model. This means every message regardless of sender and/or receiver (or systems) and regardless of process all share a consistent means of describing like data – a fund is always an fund (sub account actually) and is always formatted and defined the same. This consistency reduces translation effort (and errors) and insures that all participants in the insurance value chain can share a common understanding as well as view of insurance data.

DTCC collaborated with over 55 firms to create a standard, detailed data dictionary for the implementation of the Fee & Expense Transmittal (FET) message.

A submission of a single TX Life Request for each Product CUSIP for process, storage and if applicable, forward on to receiving distributors.

Please review the FET Data Dictionary for the most updated data elements, DTCC validation rules, look up code lists and DTCC usage storage rules.

The Transmittal Data Dictionary (DD) tab within the FET data dictionary spreadsheet defines each data element used within the message. Each data element is defined by:

Element Name Attribute Name Min/Max Occurrences DTCC Validates DTCC Stores Indicator DTCC Validation Rules & Comments Definition Description

The FET data dictionary and schema samples are used for development of the fee and expense message.

Please note that the use of optional fields will depend on participant requirements, product specific requirements and arrangements between trading partners.

Additional validation rules are defined by industry working groups. Though some of the processing rules are not validated by I&RS systems, they represent the standard industry recommended processes and should be adhered to during development.

IMPORTANT: Follow these record layouts submitting your data to the system. NSCC follows strict edit criteria when editing these formats.






3.2.1 Fee & Expense Transmittal Participant Process Assumptions

DTCC will only store Product CUSIP level fee and expense data. By submitting FET messages to DTCC, the product level fee and expense data will be store

for access. DTCC does not supporting firm level trading relationships or access rules on Insurance

Profile. All submitted Product CUSIP level messages will be available to all distributors. Insurance Carriers or vendor on behalf of carriers are eligible to be the submitting firm of

FET messages. Fee objects should be modeled on FET only when fees are being applied to all levels of

product categories – PolicyProduct, FeatureProduct and InvestProduct. If costs is baked into the base M&E fee and no additional fee is applied or charged by carrier, it will not be sent by insurance carrier. Standard usage and best practices are available on our website.

FET messages will delivered via CDTS in batch based on the frequency and updates by the insurance carrier. Upon receipt, DTCC will process and forward all accepted files to all FET users.

DTCC will offer each distributor two different ways to access the FET data. They are batch data delivery and/or a User Interface. The UI called Insurance Profile will allow distributors access to browse and view all Product CUSIP level fee and expense data.

Upon completing a Product Update Form (PUF), a distributor’s Super Access Coordinator (SAC) will be authorized by DTCC’s Registration Service Group (RSG) for Insurance Profile and FET data.

Carrier Families are supported within the FET process. Primary carrier family number may be able to submit files on behalf of their ‘child’ accounts. DTCC will track both participant numbers for audit purposes.

Upon submission of the Product Update Form (PUF), each insurance carrier will access to the Insurance Profile user interface based on two different role types:

Browse - the user will be able to browse and view data only. Modify – the user will have access to upload, browse/view, and delete data.

3.2.2 Fee & Expense Transmittal Processing Choreography

- Carrier submits Fee & Expense Transmittal data file (s) to DTCC.- At predefined cycle times throughout a business day, DTCC will batch process the

message(s) received against format and validation rules.- Rejected records not passing format and/or validation rules will be transmitted back

to the original sender of the data file for corrective action.- Successful records passing format and/or validation rules will be queued for delivery.- At the FET output cycles, this is defined below in section 3.2.3. DTCC will batch and

transmit successfully validated records to consumers (distributors) of the data.- After each output cycles, DTCC will load data into the Insurance Profile tables for

storage.- FET records received by DTCC after the daily cutoff time will be pended and

processed on the next available business day.




3.2.3 Fee & Expense Transmittal Datatrak and Autoroute & Output Cycles

The FET Datatrak (Inbound) SYSIDs and Autoroute (Outbound) product numbers are as follows:

Datatrak: 26023 (Production)46023 (PSE – testing)

Autoroute: 02342423 (Production)02982423 (PSE – testing)

All I&RS files have unique processing cycle schedules. For the FET the following cycle times will be followed. All of the listed times are Eastern Standard Time (EST).

ProductionCycle # Output Time Destination Business Purpose of File1 6 AM Distributor / Provider Distributor Output / Provider Rejects2 10 AM Distributor / Provider Distributor Output / Provider Rejects3 2 PM Distributor / Provider Distributor Output / Provider Rejects4 6 PM Distributor / Provider Distributor Output / Provider Rejects


Test (PSE)Cycle # Output Time Destination Business Purpose of File1 6 AM Distributor / Provider Distributor Output / Provider Rejects2 9 AM Distributor / Provider Distributor Output / Provider Rejects3 Noon Distributor / Provider Distributor Output / Provider Rejects4 3 PM Distributor / Provider Distributor Output / Provider Rejects5 6 PM Distributor / Provider Distributor Output / Provider Rejects

Providers must submit FET message prior to Output time to be included in that cycle.

3.2.4 Fee & Expense Transmittal Load Process

Upon receipt of the FET message, DTCC will process all accepted data into the database tables for storage.



Upon each output cycle, data will be inserted into the tables based on the unique storage key of the Product CUSIP.

If the unique storage key is found, DTCC will delete all applicable data identified by the key.

The new data will be inserted into the tables:o Product Detailso Product Level Feeso Feature/Rider Level Feeso Sub Account (Fund) Level Fees

4 INSURANCE PROFILE – USER INTERFACE

Insurance Profile is the only repository for annuities distributors to access expense, fee and commission schedule data from carriers in a single location – making it easy and efficient to access the data needed to comply with the DOL fiduciary rule disclosure requirements.

DTCC will offer users of Insurance Profile the ability to access data by offering insurance carriers two separate role types to manage and view the data. The insurance carrier’s Super Access Coordinator (SAC) will manage access to their internal users. The two types of roles are Browse (view) only and Modify. The Modify role type will allow the user to upload Fee & Expense messages, view data for testing purposes and delete Product CUSIP data from the database. The distributor users will have the ability to browse and view data via the User Interface.

Upon entry into Insurance Profile, the user will have access to Browse by Carrier or CUSIP Number

Upon submission, the user may view both Commission and Fee & Expense details in the same inquiry.

If Product CUSIP does not have data for either CST or FET, a message will be returned to the user.

Insurance Profile will support the reporting if the Product CUSIP is a Fee Based or Commission Based products. This will be driven of the CUSIP master file managed by insurance carriers.

5 DOCUMENT REVISION UPDATES – CHANGES FROM BASELINE DOCUMENT DRAFTED 10/31/2016

Date Version Change10/31/2016 v.01 Initial draft11/29/2016 v.02 Added additional output cycles to CST and FET in PSE and Production01/18/2017 v.03 Corrected the DataTrak and AutoRoute for FET01/20/2017 v.04 Changed ACORD FET version from 2.38 to 2.37


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