Commission sharing agreement

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A Commission Sharing Agreement ("CSA") or in the US named Client Commission Agreement ("CCA") is a type of soft dollar arrangement that allows money managers to separately pay the executing broker for trade execution and ask that broker to allocate a portion of the commission directly to an independent research provider.[1] CSAs consist of a percentage of execution fees, that are directed to pay for research reports from sell-side banks. The form of a CSA can be as short as one page.[2] One of the disadvantages of CSAs is the counterparty risk, that the broker becomes as the cash is held on the broker's balance sheet [3] and not in a segregated client account. Moves included in MiFID II such as the creation of Research Payment Accounts (RPAs) aim to address this issue.

References[edit]

  1. ^ (PDF) http://www.indxsecurities.com/content/7/JP1_add.pdf. Retrieved February 29, 2012.  Missing or empty |title= (help)[dead link]
  2. ^ Example of a CSA
  3. ^ Are CCAs Safe? -- Growing Counterparty Risk Drives The Buy Side To Rethink Client Commission Agreements And Consolidating Broker Relationships