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Rating:DTCC Slashes Fees for Fund/SERV and Networking Not Rated 0.0 Email Routing List Email & Route  Print Print
Thursday, February 14, 2008

DTCC Slashes Fees for Fund/SERV and Networking

News summary by MFWire's editors

The Depository Trust & Clearing Corporation's wealth management services division has lowered fees for its Fund/SERV and Networking services. Effective January 2, the cost for a Fund/SERV transaction is 7.5 cents, a 32-percent cut, and the fee for Networking went down 33 percent, to 10 cents for every 100 records processed. DTCC officials said the fee cuts represent a reduction of $18.4 million.

Ann Bergin
DTCC's Wealth Management Services
Managing Director and General Manager
"Through a disciplined focus on cost controls, productivity and cost-efficient technology development, we have been able to drive down costs and make a positive impact on our customers' bottom line," said Ann Bergin, managing director and general manager, DTCC's Wealth Management Services.

Last year, Fund/SERV processed 170 million transactions worth $2.5 trillion, an increase of 19 percent from 143 million in 2006. Networking supported 93 million accounts at the end of 2007, up 12 percent from the year before.

Press Release

New York, NY, February 14, 2008 - The Depository Trust & Clearing Corporation's Wealth Management Services unit has announced fee reductions for Fund/SERV® and Networking, two of its highest-volume services for the mutual fund industry. The decreases, which represent a reduction of $18.4 million, are part of the largest-ever fee reductions for services provided by DTCC's subsidiaries.

Effective January 2, 2008, the cost for a Fund/SERV transaction was reduced to 7.5 cents, a 32% reduction from the previous fee of 11 cents. The fee for Networking was reduced by 33% and is now at 10 cents for every 100 records processed, versus 15 cents.

Fund/SERV is the industry standard for processing mutual fund transactions - purchases, redemptions and exchanges - and providing a single daily net money settlement through an automated, centralized environment. Networking is a complementary service to Fund/SERV through which account-level information can be exchanged and reconciled between funds and their distributor partners. Both are provided by DTCC's subsidiary, National Securities Clearing Corporation (NSCC).

"Through a disciplined focus on cost controls, productivity and cost-efficient technology development, we have been able to drive down costs and make a positive impact on our customers' bottom line," said Ann Bergin, managing director and general manager, DTCC's Wealth Management Services. Bergin also cited an organization-wide program to lower internal costs by implementing such metrics-based initiatives as Six Sigma and the Capability Maturity Model Integration (CMMI), developed by Carnegie Mellon University's Software Engineering Institute.

Fund/SERV and Networking Grow in 2007
"As an at-cost provider, DTCC continually reassesses the fee structure of our services so they are aligned with increasing volumes from our customers," Bergin added. In 2007, Fund/SERV processed 170 million transactions worth $2.5 trillion, up 19% from the 143 million recorded in 2006. On a daily basis, this averaged to 676,000 transactions valued at $9.87 billion. Additionally, on five days in 2007, volumes pushed beyond the one million mark, an historical first for the service, which handles a broad range of instruments, including 1940 Act Funds, defined contribution and other types of retirement programs, and other pooled investment products such as stable value funds, bank collective investment trusts and unit investment trusts.

At the end of 2007, the number of accounts supported by Networking totaled 93 million, a 12% increase over the 83 million reported in 2006. Beyond its role as a centralized record-keeping system, Networking has become an important compliance tool through which the fund industry can meet the requirements of Rule 22c-2 of the Securities and Exchange Commission and efficiently monitor frequent trading and market timing of transactions in omnibus and super-omnibus accounts.

DTCC's Fee Reductions
The overall reduction of fees by DTCC subsidiaries for 2008 will result in a net savings to customers of approximately $198 million for 2008. This comes on top of 2007 fee cuts that yielded customers approximately $88 million. The fees relate primarily to core services provided by NSCC, The Depository Trust Company, Fixed Income Clearing Corporation's Mortgage-Backed Securities Division and Deriv/SERV.

About Wealth Management Services
Wealth Management Services is a business unit of The Depository Trust & Clearing Corporation (DTCC) that provides transactional and information services to the mutual fund and managed accounts industries. It is also developing a new processing solution for alternative investment products, which will be launched pending approval from the Securities and Exchange Commission. Wealth Management Services automate, standardize and streamline the processing of transactions and data exchange between asset managers and their network of distribution partners, lowering risk, operational costs and errors.

About DTCC
The Depository Trust & Clearing Corporation (DTCC), through its subsidiaries, provides clearance, settlement and information services for equities, corporate and municipal bonds, government and mortgage-backed securities and over-the-counter derivatives. In addition, DTCC is a leading processor of mutual funds and insurance transactions, linking funds and carriers with their distribution networks. DTCC's depository provides custody and asset servicing for 3.5 million securities issues from the United States and 100 other countries and territories, valued at $40 trillion. In 2007, DTCC settled more than $1.8 quadrillion in securities transactions. DTCC has operating facilities in multiple locations in the United States and overseas. For more information on DTCC, visit www.dtcc.com.  

Edited by: Armie Margaret Lee


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