Aviva Investors has become the first buy-sider to sign-up for newly launched commission sharing agreement (CSA) management service Commcise.
The move by Aviva comes as UK regulator the Financial Services Authority (FCA) closes its consultation on the use of dealing commissions to pay for research.
Amrish Ganatra, partner at Commcise, said that the consultation paper has resulted in increased interest among both buy- and sell-side firms in ways to better manage CSAs.
Commcise’s cloud-based platform enables buy-siders to manage their complex relationships with brokers and make payments from pools of commissions to independent research providers.
“Traditionally, CSAs have been managed using spreadsheets and manual payments and were labour intensive and so didn’t scale up well,” said Ganatra.
With the FCA expecting buy-siders to manage their commission spend better and ensure research they receive is good value for their clients, use of CSAs, which let investors pay third-party research providers from the commissions they give to brokers for execution, is expected to increase.
Commcise is hoping to benefit from being an independent platform. The business is a pure software provider and the service broker-neutral, removing the conflicts of interest in the asset management industry that the FCA has been keen to stamp out.
While the buy-side has already been moving towards greater transparency on research spend, Ganatra believes the FCA’s push has led to sell-side firms embracing CSAs.
“We’ve seen more interest from buy-siders since the FCA launched its consultation in November, but actually the sell-side have also been very positive about this and we’ve had a lot of interest from brokers that don’t have their own CSA platform who want to offer them to their clients,” he explained.
The platform has 26 sell-side firms using it. Aviva is the first buy-sider but several more are currently in a proof of concept stage and are expected to go live soon.
Aviva Investors, which needs to manage commission spend across more than 20 brokers, said it wanted to improve the process of using CSAs with a more robust way of handling the agreements and full audit trail.
Katie Pollock, counterparty risk, derivatives and broker relationship manager at Aviva Investors, said: “Everyone involved, including Aviva teams and all our brokers can log onto the same system and record their data in one place. It replaces a complex set of processes and spreadsheets and provides instant clarity on our financial position”.
The platform also offers a flexible permissions system, meaning compliance officers can monitor and approve CSAs and limit or expand and individual’s access where necessary.
Commcise is also planning a European rollout, with French buy-siders in a proof of concept stage and interest from Swedish firms. Ganatra said US-based brokers and asset managers have also registered interest.