ATLANTA— CMS has finalized a deal with Fidelity Capital Markets that allows credit unions to execute security transactions directly with Fidelity.

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. Previously, the ability to trade directly with Fidelity was only available to credit unions with several billion dollars in assets.

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

The agreement provides access to the Fidelity Capital Markets Institutional Trading desk to CMS client credit unions without paying a commission on each trade. Instead, credit unions will pay an annual advisory fee to CMS. Since the trade does not include a mark-up/down or commission, investment yields on the balance sheet will improve immediately.

Lester added the agreement will also allow credit unions the flexibility to reposition their portfolios in a rising rate environment, or take a defensive position, because they can adjust their portfolio without compromising their investment yield due to commissions.

CMS will offer this service in two tiers. Credit unions that have the expertise in house to make their own investment decisions can pay just the annual advisory fee and access Fidelity in a self-service mode. CMS will, however, send out alerts regarding Fidelity offerings or market changes that may be of interest to credit unions, and provide purchase analysis as needed.

Credit unions that want to utilize CMS’ balance sheet management and ROA optimization expertise can participate in the CUSO’s Total Management Solutions program, which includes Fidelity trading access as well as a portfolio review and investment advisory services, loan review and loan participation alternatives, IRR modeling and back testing, bond accounting and other services.

“It’s been a very long time since credit unions saw a rising rate environment,” Lester said. “In fact, it’s been so long, a lot of the CFOs who were working in credit unions back then have since retired. We’re 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’ve 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.”

For more information on CMS’ Fidelity trading, contact SVP Funding Ryan Enright at 913-402-2609 or

Click here to read article in Credit Union Times.