DTCC TO OFFER MUTUAL FUND SERVICES TO NON-US FINANCIAL FIRMS

Posted April 22, 2009

NEW YORK – The Depository Trust & Clearing Corporation (DTCC) announced plans to begin offering mutual fund services to non-US financial firms.

“Our cross-border business has been growing steadily over the last five years, primarily through overseas affiliates of US firms,” says Ann Bergin, Managing Director and General Manager, DTCC Wealth Management Services. “With pressure to reduce expenses and streamline operations, interest has heightened from overseas funds and firms asking DTCC to extend the reach of our services to their markets. This will allow them to gain, in particular, the cost and operational advantages of our Fund/SERV system.”

DTCC’s fee to process a mutual fund transaction through Fund/SERV is US $0.05. According to the International Securities Services Association, in 2008 nearly half of all investment fund transactions in Europe were still being handled manually and cost between €40 and €50 (about $53 to $67) per transaction. An earlier study in 2007 carried out by Deloitte put the cost at €62.

Rotterdam-based Robeco will be one of the first firms applying for membership in the National Securities Clearing Corporation (NSCC), the DTCC subsidiary that provides mutual fund services. “Robeco is very pleased to participate in the first offering of foreign membership in NSCC,” says David Pond, Senior Vice President, International Sales and Business Support at Robeco. “The opportunity to use its fund services will allow us to better serve our global distribution partners.”

In 2008, Fund/SERV processed 193 million transactions valued at $2.9 trillion, from 650 fund complexes. The system supports 42,000 individual funds across multiple asset classes. Worldwide mutual fund assets were $21.66 trillion at the end of the third quarter of 2008 with a third ($9.48 trillion) domiciled in Europe, according to The Investment Company Institute.

“We welcome the competition presented by NSCC’s acceptance of regulated, non-US entities onto its mutual fund platform,” says Rudolf Siebel, Chairman of the Fund Processing Standardisation Group of the European Fund and Asset Management Association (EFAMA). “Quality providers seeking to improve standards are important in providing choice, which in the long run will improve service to the investing public. It is expected that any new market entrants will work toward increased automation and those standards recommended by EFAMA.”

DTCC’s approval by the US Securities and Exchange Commission (SEC) for this direct-membership category follows the SEC’s approval in 2008 allowing non-US firms to use DTCC’s subsidiaries’ post-trade clearance and settlement services for transactions in US equity markets; these services are offered by NSCC and The Depository Trust Company.