Securities technology: Federated Upgrades Fund-Clearing System for

Federated Services Co. says it has expanded the capabilities of its mutual fund clearing system to help banks cut costs and improve their trust operations.

Pittsburgh-based Federated Services, a unit of mutual fund complex Federated Investors Inc., said last week that its TrustConnect clearing service, which was introduced last April, has been upgraded by no- transaction-fee, or NTF, agreements with more than 1,100 mutual funds.

In addition to Federated's funds, these include investment products from Dreyfus, Putnam, and Van Kampen American Capital.

The upgrading is aimed at further reducing clearing costs for bank trust departments as the mutual fund industry has boomed during the past decade. Recently, trust departments have sought to streamline their interaction with the thousands of mutual funds in which clients may want to invest, Federated officials said.

"Today, the majority of all bank trust department trades are made as either an electronic order entry into a fund group's proprietary system or through a phone call or fax to the fund group," said Jeff Niss, president of Federated Shareholder Services Co. "These transactions are settled with each fund group individually and must be entered separately into the bank's trust accounting system."

TrustConnect automates this process by connecting directly to bank trust accounting systems developed by National Computer Systems Inc. and Sungard Financial Systems. This month, the service will be extended to users of M&I Data Services.