The Board of Directors has adopted fee adjustments to select NSCC product lines. Continuing the clearing corporation’s approach to the pricing of services, these changes will:

• Set fees generally according to cost,
• Establish pricing on a product-by-product basis, and
• Use fees, where appropriate, to discourage manual or exception processing and to encourage immobilization and dematerialization

As a result, NSCC is reducing certain fees while increasing other ones -- particularly in the Fixed Income product line -- to more closely align these service fees with their respective costs. These changes are expected to reduce overall revenues by $48.4 million for next year. Concurrent with these changes, The Depository Trust Company (DTC) announced today that it would increase fees by a total of $12.3 million. When combined, it is expected that these steps may reduce overall fees to Participants by a projected $36.1 million for next year.

Taking into account the fee revisions being adopted by NSCC and DTC, the impact to fees for Participants that are members of both entities (based upon actual activity from June through August of this year) should yield an average monthly decrease of 5%. An individual Participant’s bill may show a greater or smaller decrease, or in some cases a modest increase, based upon the Participant’s own service mix.

The specific NSCC fee revisions can be found in the attached document, and an appropriate rule filing will be made with the Securities and Exchange Commission. If you have any questions about the changes to the fee schedule, or about the impact to your firm’s future bills, please contact your Relationship Manager for assistance.

Unless otherwise indicated, these new fees will be effective January 1, 2002.