The Depository Trust & Clearing Corp. (DTCC) has announced a fee change for 2006 for its subsidiaries, which results in a net fee reduction of $161.3 million, the largest net reduction ever made by the organization. The changes affect DTCC subsidiaries including National Securities Clearing Corp. (NSCC), The Depository Trust Company (DTC) and Fixed Income Clearing Corp. (FICC).
Several factors allowed DTCC the room to reduce fees including tightened expense controls across the organization and the fact that processing volume increased substantially this year for many businesses. Further, several projects causing the DTCC to incur additional expenses over the past four years have now been completed. These include the creation of the Southern Business Center in Tampa, Fla., for business continuity and the insourcing of data processing done by the Securities Industry Automation Corp.
“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 Donahue, DTCC’s chief operating officer, in a release.
The fee reductions are as follows:
NSCC fees will be reduced by approximately $99.4 million with reductions in fees for trade comparison and recording services.
DTC fees will be reduced by approximately $36.6 million, including the elimination of fees for messaging and file transfers for all depository services, and the reduction of settlement services fees.
FICC fees will be reduced by approximately $25.3 million with reductions for trade submission and trade netting for U.S. government securities, Settlement-Balance Order options and trade-for-trade submissions in mortgage-backed securities.
The majority of fee reductions will go into effect on January 2, 2006. Since DTCC subsidiaries began operating in late 1970s, the average transaction cost per trade has gone from $1.64 to just seven cents in 2005.