BISYS Group Inc. hopes to profit from helping financial services companies avoid market-timing problems.
Speculators who time the market make a series of rapid trades in an effort to benefit from inefficiencies in the flow of financial information. The practice is not necessarily illegal, but the U.S. Securities and Exchange Commission discourages money managers from allowing unfettered marketing timing without thorough disclosures to investors because of concerns that market timing drives up fund costs for ordinary, buy-and-hold shareholders.
The retirement services unit of BISYS, Roseland, N.J., has developed a SEC Rule 22c2 compliance program that includes automated systems for detecting and enforcing a fund’s frequent-trading policies.
The program also can provide shareholder and transaction information in a standard format, and it includes a shareholder information services agreement that fund companies can use to get intermediary information-access agreements in place by April 16, 2007, when new compliance rules kick in, BISYS says.