BoNY: Secret to Soft Dollar Regs is More Disclosure

August 16, 2004 ( - The trick in dealing with questions raised over the use of soft dollar payments for investment research is to help institutional investors more easily track and report their commission payments, one financial services provider asserts

To help clients accomplish this, BNY Securities Group, The Bank of New York’s (BoNY) Institutional agency brokerage, has enhanced its commission management portal to improve commission reporting transparency, BoNY said in a news release. Through InterComm, its INTERactive COMMission management portal, the firm now offers a daily account snapshot that provides a day-to-day, year-to-date breakdown of trading commissions generated for the purchase of independent research. The improvements also include automation of a wide range of tasks revolving around the invoice processing, payment, and vendor management functions.

The BoNY announcement said the enhanced InterComm site also allows clients to access their current monthly commission statements as well as an archive of previous statements and client reports. The InterComm portal provides easy access to current regulatory releases, best practice guides and other information.

Even though many regulators and lawmakers have called for stricter regulation for soft dollar payments because of fears they may lead to conflicts of interest (See  Soft-Dollar Debate Continues Red Hot ) , Joseph Velli, BoNY senior executive vice president and head of BNY Securities Group, argued in favor of the system.

  “We believe that the use of commissions to purchase research offers substantial benefits to investors and is an integral part of the investment process and that more complete disclosure of how commissions are utilized should be provided to fund managers and investors,” Velli asserted in the news release. “We expect that regulators, as evidenced by the recently enacted Global Research Analyst Settlement, will continue to encourage the use of independent research.”