Federated Investors has launched a new mutual fund clearing service that it hopes will streamline fund trading activity for bank trust departments.

Clients using the new service, called TrustConnect, will be able to substantially automate their mutual fund processing and reduce their contacts with several fund companies to a single source.

Federated, a Pittsburgh-based asset manager and fund distributor, developed the TrustConnect concept along with two of the mutual fund industry's leading trust accounting vendors, NCS and SunGard.

After TrustConnect electronically receives trades from a trust department's accounting system, it transmits the trade to each participating fund group using the capabilities of Fund/Serv, a clearing and settlement service for mutual funds.

"As the number of mutual funds has grown, it has become more cumbersome for trust departments to settle their mutual fund trades and accurately maintain fund positions," said Jeffrey Niss, Federated's head of mutual fund services. With TrustConnect, he said, Federated's clients can reduce manual work and resulting errors and improve customer response time.

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