Implements Phase 3 Debt Functionality
Wolters Kluwer Financial Services today announced that Genworth Trust has implemented its GainsKeeper® solution to simplify the process investors use to complete their tax returns in compliance with all phases of cost basis reporting, including Phase 3 debt reporting.
The Emergency Economic Stabilization Act of 2008 mandates that brokerage firms and custodians provide increased reporting and transparency to investors for gains and losses. Phases 1 and 2, cost basis reporting on equities and mutual funds, have already been implemented. Complying with those regulations was a challenge for many securities operations across the country.
Phase 3 debt reporting requirements, which go into effect January 1, 2014, are widely recognized as the most challenging of the three phases. The rules require cost basis calculations for Original Issue Discount (OID), bond premium and market discount that must be integrated with corporate actions and wash sales.
“As a custodian servicing clients of independent financial advisors, implementing GainsKeeper not only makes it easier for our clients to prepare tax returns, but also it reduces the complexity of complying with the steady stream of regulatory changes,” said Gaurav Auditya, director of Custody & Trading at Genworth Trust. “As a result, we can invest more time and energy in building capabilities our customers want.”
“The unique challenge is not just achieving compliance with the cost basis reporting requirements, but mobilizing the organization to deliver operational changes with technology upgrades efficiently. We are very excited to work with Genworth Trust and help them stay ahead of the curve and the industry,” said Chuck Ross, general manager of Investment Compliance Solutions at Wolters Kluwer Financial Services.
“Together, we were able to implement a new technology quickly to solve a complex business and regulatory need within some very tight deadlines. We’re ahead of schedule complying with regulations,” said Raygar Khailany, director of Technology at Genworth Trust.
“There are significant complexities in the tax rules and calculations applicable for reporting of debt in particular,” notes Stevie D. Conlon, senior director and tax counsel, Wolters Kluwer Financial Services. “For example, corporate actions affecting debt and the tax rules applicable for calculating OID, market discount and bond premium for various specific types of bonds, including those subject to special rules such as convertible debt and derivative-like instruments, can be extremely complicated. These nuances present significant challenges for brokers in preparing for timely compliance with Phase 3.”
To help firms prepare to meet the Phase 3 requirements of this law, Wolters Kluwer Financial Services also published the Cost Basis Phase 3 Debt Reporting Readiness Checklist.