Mutual fund firms and their distributors will get a break on their Fund/SERV bill next year. The Depository Trust & Clearing Corporation (DTCC) is planning to take at least $161 million out of its fee structure for 2006.

The New York-based clearing firm is making the cuts across its subsidiaries, including the National Securities Clearing Corporation (NSCC), The Depository Trust Company (DTC) and Fixed Income Clearing Corporation (FICC).

DTCC operates in a similar fashion to a cooperative; it is owned by its member firms and passes costs savings to its clients. Typically, those savings are achieved through volume increases and new technologies.

Donald F. Donahue, DTCC's chief operating officer, said that the upcoming fee cuts were primarily the results of tight expense control management and substantially increasing processing volumes in most of its businesses.

"On a gross basis, we reduced fees $183.7 million, but this figure was offset by increases in fees in certain categories," said Donahue.

He added that DTCC also will realize savings in 2006 as significant "special expenses" -- including the costs of establishing its Southern Business Center in Tampa -- are completed.

The biggest fee cuts will be made by the NSCC, which will slice its fees by approximately $99.4 million. The biggest cuts will come in fees for trade comparison and recording services as well as Fund/SERV and Networking fees. The Networking fees cuts will come on February 2.

DTC fees will be fall by roughly $36.6 million over the next year, including the complete elimination of fees for messaging and file transfers for all depository services. Settlement services fees also will be reduced.

FICC fees will be reduced by approximately $25.3 million with reductions for trade submission and trade netting for U.S. government securities and for Settlement-Balance Order options and trade-for-trade submissions in mortgage-backed securities.  

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