It would disadvantage small fund-management start-ups that badly need initial help from soft brokers.
Soft brokers work differently: they provide fund managers with inducements—say, a Reuters screen or research reports in the hope that fund managers will channel business in their direction.
Publicly traded prostitutes stake out corners, broker soft caress of 50-50 cotton-poly.
Themed adverts for insurance brokers, soft drinks and fine bone china accompanied the spoof stories.
There are also two types of brokers: full-service brokers and soft ones.
Celestial now spends only $40 to $65 to recruit each new client, but Adrian Ngan, an analyst with BNPPrime Peregrine, predicts that costs will rise as online brokers offer soft rebates to attract new business.
A fund manager will be reluctant to consider switching from a broker who offers soft credit, even if the service is better elsewhere.
Moreover, an end to soft commissions would put some agency brokers out of business, so reducing diversity in the market.
We haven't even mentioned the possibility of soft money transaction costs in which brokers put you into funds that are run by friends who end up compensating the brokerage with either free research or increased trading volume.
So Mr. Babbit brokered a complex deal, a "soft landing" that would give California 15 years to break its water habit and return to its original allotment.
Managers with softing arrangements may not hunt for the broker offering the best price, thus harming their client's interests.Still, few fund managers and brokers endorse another proposal in the Myners report, namely, to roll broking commissions and fund-management fees into one, presenting clients with a single, flat fee.
