DTCC's rebates and fee reductions reflect its economies of scale, critical mass and tight fiscal management. The record rebates and recent fee reductions reflect DTCC's continuing commitment to eliminate operational inefficiencies and drive down clearing and settlement costs.

DTCC's management team has established aggressive yearly expense reduction targets, and the company employs a variety of best practices and strategies, including our Six Sigma quality program and our successful pursuit of the Capability Maturity Model Integration (CMMI) recognition for standardizing our technology processes, to help us achieve our goals.

Rebates and fee reductions are only part of the savings DTCC delivers to the industry. The netting down, or reducing the number of trade obligations requiring financial settlement, and streamlining settlement processes frees up trillions of dollars of capital each year that customers can then use for other investment purposes.

NSCC optimizes capital for its customers by netting down trade obligations through its Continuous Net Settlement system. In 2006, NSCC reduced the total value of obligations requiring financial settlement by 98% - from $174.9 trillion to $3.8 trillion. On June 8, the peak trading day of 2006, NSCC processed 50.1 million transactions valued at $1.02 trillion, but through netting, reduced the value of obligations settling by 98% to $16.6 billion.

Through its daily netting process, FICC sharply lowers the total number of government and mortgage-backed securities trade obligations that require financial settlement. In 2006, FICC's netting process eliminated three-quarters of all government securities trades requiring settlement, and nearly 95% of all mortgage-backed securities trades. This markedly increased the capital available to the financial services industry, while lowering risk and improving efficiency.

Extensive risk mitigation services from DTCC also help the industry avoid potential loss.