Finance: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
- ↑ "IND-X Advisors | Home". http://www.indxsecurities.com/content/7/JP1_add.pdf. Retrieved February 29, 2012.[|permanent dead link|dead link}}]
- ↑ "Example of a CSA". http://farinaandassociates.com/forms/client_commission_agreement.pdf#.
- ↑ Are CCAs Safe? -- Growing Counterparty Risk Drives The Buy Side To Rethink Client Commission Agreements And Consolidating Broker Relationships
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