Instinet Canada, the Canadian subsidiary of agency-only broker Instinet, has introduced BrokerShare, a commission sharing arrangement (CSA) programme.
BrokerShare allows clients to ‘unbundle’ their research costs from execution fees and set explicit costs for both, thus supporting the selection of brokers based on execution quality rather than research payment commitments.
Under the programme, institutional clients accrue trading commission credits in a BrokerShare account and then direct Instinet Canada to pay participating brokers whose research the clients have consumed. Instinet Canada handles all payments (which are variable based on the client’s discretion), administration and record-keeping through an online commission management system.
“As significant as new alternative trading systems have become, the unbundling of research from execution should have as profound an impact, if not more, on a fund’s execution cost savings,” said Thomas Young, head of trading at Instinet Canada, in a statement.
Instinet introduced BrokerShare to the US in 2003. It now has over 300 US participants, and payouts in 2007 totaled more than US$30 million.