What does STRF stand for?

SEC officials said about 10 percent of funds impose short-term redemption fees.

Many sellers of fund shares have been surprised by back-end sales charges, short-term redemption fees or account-closing fees.

That's why these charges are sometimes called short-term redemption fees.

Firms that have instituted short-term redemption fees report that the move has barely had an impact on the flow of money rushing into a fund when it's hot and leaving when things cool.

In 2006, the service was enhanced to accommodate the impending compliance requirements of the Securities and Exchange Commission (SEC Rule 22c-2) related to monitoring frequent trading and market timing, and the application of short-term redemption fees.

Leveraging technology that already exists within Networking, one of its key Mutual Fund Services, DTCC has developed a solution that will allow funds to more accurately track and record instances of frequent trading in omnibus accounts (a pool of individual accounts combined into one account, usually in the name of an intermediary firm), and then use that information to impose short-term redemption fees, if applicable.

Last September, DTCC went live with an initial set of enhancements to Networking and Fund/SERV that automated the processing of short-term redemption fees, charges to investors who rapidly roll in and out of funds before a predetermined holding period has elapsed.

We believe that a short-term redemption fee will serve as an effective means of ending this adverse trading activity.