Commission sharing agreement
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
- ^ http://web.archive.org/web/20160302124748/http://www.indxsecurities.com/content/7/JP1_add.pdf. Archived from the original (PDF) on March 2, 2016. Retrieved February 29, 2012.
{{cite web}}: Missing or empty|title=(help); Unknown parameter|deadurl=ignored (|url-status=suggested) (help) - ^ Example of a CSA
- ^ Are CCAs Safe? -- Growing Counterparty Risk Drives The Buy Side To Rethink Client Commission Agreements And Consolidating Broker Relationships