Buy-side firms will have greater scope to manage costs and commission sharing agreements (CSA) at the fund level with a new product from agency broker Instinet.
The latest version of the firm's Plazma CMS platform so buy-side firms can view budgets on a sub-account level, allowing them to allocate vendor charges across multiple funds and make CSA payments at a fund-level basis.
“The challenges associated with compressed commission pools continue to add pressure the soft dollar budgeting and administration process,” said Jonathan Kellner, head of the Americas region at Instinet. “We worked with our clients to improve efficiency by adding the ability to track and manage payments on a sub-account level.”
The upgrade comes weeks after UK market watchdog the Financial Services Authority (FSA) signalled a crackdown on bundled services for commissions from the sell-side. The FSA will not introduce new rules, but strengthen efforts to enforce existing regulation, which are oft breached by industry-accepted practice.
The FSA initiative on bundling, or soft dollars as it’s known in the US, led to an expected rise in use of CSAs from the buy-side as firms look to rely less on traditional models of research from the sell-side.
Although the soft-dollars issue is not a major concern for regulators in the US, where the practice is protected by legislation, there have been moves to outlaw the practice in the past. There are currently no intentions to crackdown on the practice in the US in the near future.
BAML adds options to commission platform
Meanwhile, Bank of America Merrill Lynch added US electronic options to its Global Commission Management platform, giving clients an integrated and automated payment avenue for trading the instruments.
Asset managers can now access the bank’s global trading infrastructure across high and low touch channels and streamline management of broker commissions across asset classes.
The support the new capabilities, the bank has hired JP Xenakis as director of electronic options sales. Xenakis joins from Barclays, where he was head of electronic options trading distribution.