Fund/SERV, Networking Fees Cut by a Third

DTCC has decreased fee reductions for Fund/SERV and Networking, two of its highest-volume services for the mutual fund industry. This is the second time since 2006 that Fund/SERV fees were cut, and the second time since 2006 that Networking fees were reduced.

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. 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, NSCC.

Fund/SERV and Networking Grow in 2007

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, up 19% from the prior year’s 569,000 daily volume. Total dollar value of the transactions rose to $2.5 trillion in 2007 versus $2.1 trillion in 2006.

On five days in 2007 and on another five days between January and mid-April 2008, volumes pushed beyond the one million mark, an historical first for the service – and rose to an all-time high of 1.7 million on January 22. The service handles a broad range of instruments, including 1940 Act Funds, defined contribution and other types of retirement programs, and 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.