As a result, a money manager can pay for the research he uses by allowing search providers to “share or share” in his trades commissions only if you are a registered dealer broker. It also means that the “introductory broker” must comply with the various rules set out in the July interpretive guidelines, which define what a broker must do to “achieve” a transaction. However, when a portfolio manager collects the research fee at the same time as a transaction fee, the fee must indicate a separately identifiable research fee and the manager must continue to use an RPP. Although Section 13, paragraph 3, appears to allow for the continued use of commission-sharing agreements (ASCs), the portfolio manager must therefore estimate research costs in advance and disclose them to clients on the basis of the relevant predetermined research budget, and the CSA will be subject to strict evaluation, transparency and reporting obligations. Traditionally, brokers who provide funds to institutional managers in the United States are compensated for this activity by obtaining brokerage commissions for the execution of securities transactions for managers` accounts. Asset managers generally strive to structure these client commission (CCAS) or soft dollar (CSAs) agreements outside the United States in order to meet the safe haven created by Section 28 (e) of the Securities Exchange Act of 1934. The Safe Harbor under Section 28 (e) allows asset risk managers who meet safe port requirements to use commissions generated by their managed accounts to pay for research used or used on behalf of these accounts as part of the investment decision process. The specific research fee is provided . . . not be related to the volume and/or value of transactions on behalf of customers. . .
. Any provision of the company for the collection of the customer search fee, which is not levied separately, but with a transaction fee, must indicate a separately identifiable search fee and fully meet the conditions [relating to the operation of RPA]. Research, which constitutes an MNMB, will not be prohibited as an incentive and will not be subject to the custom research payment scheme described above.