The information below is a result of our efforts to understand the fee and to determine how it is assessed. Please let us know at support@propreports.com if anything is incorrect or if you can provide additional information.
What is the NSCC?
National Securities Clearing Corporation (NSCC) is a subsidiary of The Depository Trust and Clearing Corporation (DTCC). It provides "central counterparty services and a guarantee of completion for certain transactions for virtually all broker-to-broker trades involving equities, corporate and municipal debt, American depositary receipts, exchange-traded funds, and unit investment trusts" (source).
What is the NSCC Fee and how is it charged?
This fee is a cost to clear transactions and is billed to NSCC members (Clearing Firms). Some Clearing Firms pass these fees to their correspondents directly while others include them in their clearing rates.
You can visit the DTCC website here to use the NSCC estimation calculator or see the components they use in their calculation.
Can an exact formula be entered into PropReports to calculate the NSCC fee per trader?
Clearing Firms that pass this fee directly will typically send their correspondents a monthly bill. Due to the nature of the calculation, there is no per-transaction formula that will produce an exact result. Some of the reasons are:
- Unknown Number of "Clearing Units": The fee is partially based on transaction counts as reported by the street side venue. All exchanges report trades differently and the totals may not necessarily match the client side. Furthermore, non-exchange venues sometimes aggregate or compress reported trades resulting in different transaction counts.
- Unknown Discount: The fee is tier-discounted based on transactional volume across multiple correspondents. The discount amount is unknown ahead of time and changes every month.
- Unable to Determine the Value-Based Fee: Part of the NSCC fee is based on the value of transactions "into the net" and "out of the net." We were unable to get an explanation from a clearing firm or DTCC as to how this is computed other than the fact that the calculation is very complex.
Given the above, many clients set up fee schedules that attempt to estimate their NSCC fee on a "best effort" basis.