CANADA - The Caisse de depot et placement du Quebec will abolish its program of soft dollar commissions on equity and derivatives trading from January 1.
The Caisse said in this regard, it was following the “best practices” recommended by various international supervisory bodies.
Soft dollar commissions, which are widespread in the industry, are payable to full service brokers, in addition to brokerage fees, in return for research and financial information services.
“In future, when these services are required, the Caisse will pay for them directly from its operating budget, thereby increasing the transparency of its securities trading costs,” the institution said in a statement.
Recently regulators in the UK and US have been pushing for greater disclosure of soft commissions and bundled brokerage arrangements – traditionally a grey area in the financial services industry.
Earlier this year, the Financial Services Authority (FSA) - the UK regulator for the financial services industry - released a policy statement concluding that fund managers’ use of commission should be limited to the purchase of execution and research. In November, the authority released a supplementary policy statement outlining the scope of the terms.
The Caisse is a financial institution based in Montreal with CAN$89.4bn in assets. The institution manages funds primarily for public and private pension and insurance plans and invests in the main financial markets as well as in private equity and real estate.
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