A Commission Sharing Agreement (CSA), or in the US named Client Commission Agreement (CCA), is a type of
soft dollar
Soft may refer to:
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Arts and entertainment
* ''Soft!'', a 1988 novel by Rupert Thomson
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arrangement that allows
money manager
Investment management is the professional asset management of various securities, including shareholdings, bonds, and other assets, such as real estate, to meet specified investment goals for the benefit of investors. Investors may be instituti ...
s to separately pay the executing
broker
A broker is a person or firm who arranges transactions between a buyer and a seller for a commission when the deal is executed. A broker who also acts as a seller or as a buyer becomes a principal party to the deal. Neither role should be confu ...
for trade execution and ask that broker to allocate a portion of the commission directly to an independent research provider. CSAs consist of a percentage of execution fees, that are directed to pay for research reports from sell-side banks. The form of a CSA can be as short as one page. One of the disadvantages of CSAs is the counterparty risk, that the broker becomes as the cash is held on the broker's balance sheet
Are CCAs Safe? -- Growing Counterparty Risk Drives The Buy Side To Rethink Client Commission Agreements And Consolidating Broker Relationships
{{webarchive, url=https://web.archive.org/web/20140621132131/http://insurancenewsnet.com/article.aspx?n=1 , date=2014-06-21 and not in a segregated client account. Moves included in MiFID II
Markets in Financial Instruments Directive 20142014/65/EU commonly known as MiFID 2 (Markets in financial instruments directive 2), is a legal act of the European Union. Together with Regulation (EU) No 600/2014 it provides a legal framework fo ...
such as the creation of Research Payment Accounts (RPAs) aim to address this issue.
References
Financial services