Many plan sponsors utilize various trading programs that are intended to save their fund a significant amount of money. However, if constructed improperly or left unmonitored, commission recapture programs may incur hidden costs and introduce additional risks.
Commission Recapture Program Audit for Asset Owners
The Commission Recapture Program Audit monitors such programs on behalf of our clients to ensure they are compliant with fund policies and objectives, are achieving best execution, and work as intended. For asset owners who don’t yet have a program, the service further provides independent expertise in conducting RFPs and constructing prudent commission recapture programs.
Features
Evaluation of each managers’ overall trade process for recapture and non- recapture program trades
Comparison of execution efficiency and commission rates of recapture vs. non-recapture program trades by manager and executing broker
Assess whether managers are making a good faith effort to comply with your fund’s program goals
Independent assessments from a Registered Investment Advisor along with recommendations on improving performance
Consultative Approach
Our consultants work as an extension of your staff, helping to understand and mitigate the shortcomings and inefficiencies in the trading process. With decades of experience in trade cost analysis, fiduciary monitoring and manager evaluation, Zeno AN Solutions can provide the in-depth knowledge and leading-edge technology necessary to meet your oversight needs.
Regulations in Europe under MiFID II have banned the use of soft-dollars by investment managers. As such, those who utilize global asset managers. need to make prudent, informed decisions regarding research budget requests received from their managers, and also ensure that their fund is not being used to subsidize the research costs of the managers’ other clientele.
SOFT-DOLLAR AND RESEARCH BUDGET ANALYSIS
The Soft Dollar & Research Budget Audit is designed to help asset owners review the soft dollar/research policies and practices of their managers and provide tools necessary for assessing their reasonableness, especially for MiFID II compliance.
The audit can also assist asset owners in encouraging their managers’ prompt compliance with these regulations, tracking each manager’s progress. Furthermore, it helps ensure a fund is not disadvantaged relative to the managers’ other clients.
Features
- Identification of the consent of fund asset spend research services purchased
- Section 28(e), MiFID II, and permissible cost analysis under the fund’s investment policies
- Qualitative review of manager research-budgeting practices and policies
- Comparison of pre-MiFID II research spend, baseline vs. subsequent years
- Written recommendations and follow-up on issues flagged
- Reviews whether managers are using fund assets to subsidize the research costs of European clients,
- Reviews whether US fund is being treated worse than the managers’ European clients
- Optional quantitative best execution analysis of soft dollar trades value for Section 28(e)
- Critical insights regarding managers’ research spends to help with decision making regarding future research- budget requests.