Soft dollar (or soft commission) practices involve using client brokerage commissions to purchase research that helps managers to make investment decisions.
Read the Soft Dollar Standards (PDF)
Why Did CFA Institute Develop These Guidelines?
Because the soft-dollar practices have become more complex, we developed the Soft Dollar Standards to provide guidance beyond our Code of Ethics and Standards of Professional Conduct. Our Soft Dollar Standards put the focus on the client and provide investment professionals with guidance on how to use client brokerage ethically, based on the following principles:
- Soft dollars belong to the client
- Investment managers may only purchase research with soft dollars if the primary use is in the investment decision making process, not firm management
- Investment managers must disclose all relevant benefits they receive through client brokerage
What Do the Soft Dollar Standards Cover?
- Definition of soft dollars
- Appropriate products and services to purchase with client brokerage
- Application of standards for soft dollars
- Model disclosure guidelines
- The manager's role and responsibility to clients
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