Hard Stance on Soft Dollars: Independent Research Firms React to Proposed Ban

Abstract

This article addresses the following key points: A recent US Senate proposal would ban soft dollar arrangements outright. The SEC is considering a proposal from the Investment Company Institute (ICI) that bans using soft dollars for third-party research but leaves Wall Street-sponsored research unaffected. Several large brokerages have either eliminated or significantly scaled back soft dollar payment for research. The SEC is monitoring the UK Financial Services Authority (FSA), which wants to prohibit fund managers from using soft dollars to pay for any research.