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CU Capital Market Solutions inks deal with Fidelity Capital

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CU Capital Market Solutions, an Overland Park, Kan.-based credit union service organization that offers financial management services, on Wednesday said it had reached an agreement with Fidelity Capital Markets to allow the CUSO’s client credit unions to execute securities transactions directly with Fidelity.

The CUSO said the institutions that use its services will gain the ability to use the Fidelity Capital Markets institutional trading desk. Those CUs will pay an annual advisory fee to the CUSO rather than having to pay commissions on a trade-by-trade basis.

Officials with CMS said prior to this agreement, initiating direct trades with Fidelity was an option limited to the largest credit unions.

“The move is the first of its kind for credit unions, giving them the opportunity to leverage the trading power of one of the largest asset management firms in the world,” CU Capital Market Solutions said in a statement.

Credit unions will have two options, CMS said. Those CUs that feel they have the ability to make their own investment decisions will pay the annual advisory fee and then have self-service access to Fidelity. Even under this option, CMS noted it will issue notices regarding Fidelity offerings or market changes. Purchase analysis will be available in those circumstances, the company explained.

The second option is for CUs that wish to tap the CUSO for balance sheet management and ROA optimization advice. These credit unions will be able to use the CUSO’s Total Management Solutions program, which includes Fidelity trading access, a portfolio review, investment advisory services, a loan review and loan participation alternatives, IRR modeling and back testing, and bond accounting, along with additional services.

“This is a huge win for credit unions,” said Lewis Lester, CEO of CU Capital Market Solutions. “Not only do they gain superior market execution with Fidelity, they receive market pricing without mark-up/down or commissions, so credit unions will receive wholesale pricing, resulting in a higher overall portfolio yield.”

Lester said because there are no commissions on trades, credit unions using the service will be able to reposition their portfolios in a rising rate environment.

“It has been a very long time since credit unions saw a rising rate environment,” Lester said. “In fact, it has been so long, a lot of the CFOs who were working in credit unions back then have since retired. We are seeing a new generation of credit union CFOs come to us for advice on how to manage a balance sheet in a rising rate environment, because they have never experienced it. A rising rate environment requires a very different strategy, and mistakes made today could limit credit union income significantly and potentially mean the difference between growth and being merged.”

CU Capital Market Solutions is a Registered Investment Advisor. In addition to balance sheet services, it offers specialized assets and loan programs. The CUSO provides secondary capital, term funding and overnight funding to qualified low-income designated credit unions, and it offers approved, alternative asset products, and USDA and SBA loan participations and programs to all qualified credit unions.

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