Edward C. Kelleher
New York, December 6, 2005 - The Depository Trust & Clearing Corporation (DTCC) today announced 2006 fee changes for its subsidiaries that implement net fee reductions totaling $161.3 million, the largest net reduction in fees ever made by DTCC. The fee changes, which will generally take effect January 2, 2006, are being made across DTCC's subsidiaries including National Securities Clearing Corporation (NSCC), The Depository Trust Company (DTC) and Fixed Income Clearing Corporation (FICC).
"Driving down clearance and settlement costs in the U.S. capital market not only benefits our customers, but further ensures that overall transaction costs remain low, keeping our markets the most vibrant and desirable place for issuers and investors to meet their financial needs," said Donald F. Donahue chief operating officer, DTCC.
"The fee reductions are consistent with our efforts to continue to ‘right-size' our fees," said Donahue. "On a gross basis, we reduced fees $183.7 million, but this figure was offset by increases in fees in certain categories."
Donahue pointed out several factors that enabled DTCC to achieve the fee reductions, including the tight expense controls management has put into place and the fact that processing volumes for most businesses were up substantially this year. Also, several initiatives causing DTCC to incur significant "special expenses" over the past four years - such as establishing the Southern Business Center in Tampa for business continuity purposes and the insourcing of certain data processing done by the Securities Industry Automation Corporation (SIAC) - have now been completed.
"We remain committed to achieving sustained reductions in the costs of our traditional services," Donahue said. "DTCC has already delivered an impressive series of fee reductions during the first half of this decade, and we are making every effort to deliver further reductions over the next five years."
The fee reductions are as follows:
New disincentive fees were announced as part of DTCC's effort to discourage behavior that keeps the industry from achieving peak efficiency. The disincentive fees include charges for the physical movement of securities certificates, late submissions of deposits on restricted securities, ACATS rejects, and late notifications to FICC regarding repo substitution requests.
DTCC is owned by its member firms including international broker/dealers, correspondent and clearing banks, mutual fund companies and investment banks. It operates on an "at-cost basis," returning excess revenues from transaction fees to its members. Since the late 1970's when DTCC subsidiaries began operations, the average transaction cost per trade has gone from $1.64 in 1977 to 86 cents in 1986 and to just 7 cents in 2005.
Through its subsidiaries, DTCC provides clearance, settlement and information services for equities, corporate and municipal bonds, government and mortgage-backed securities and over-the-counter derivatives. DTCC's depository also provides custody and asset servicing for almost two and a half million securities issues from the United States and 100 other countries and territories. In addition, DTCC is a leading processor of mutual funds and insurance transactions, linking funds and carriers with their distribution networks. DTCC has operating facilities in multiple locations in the United States and overseas. For more information on DTCC, visit www.dtcc.com.
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