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Soft Dollar & Research Audits

Evaluate, Manage and Control Transition Costs

New regulations in Europe under the Markets in Financial Directive II (MiFID II) have banned the use of soft dollars by investment managers. This has created a “ripple effect” for those who utilize global asset managers.


As a result, asset owners face new fiduciary risks and responsibilities; and 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.


As its name implies, 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.


Soft Dollar & Research Budget Audit also assists 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.


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  • Identification of the consent of fund asset spend research services purchased, and whether these costs were reasonable, consistent with Section 28(e), MiFID II, and permissible 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
  • Ascertains whether managers are using fund assets to subsidize the research costs of European clients, and/or if a 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.
  • Consultation advice on research



For Asset Owners, trading costs can average over -48 bp each way (-96 bp round trip)!

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