A Commission Sharing Agreement (CSA), or in the US named Client Commission Agreement (CCA), is a type of soft dollar arrangement that allows money managers to separately pay the executing broker for trade execution and ask that broker to allocate a portion of the commission directly to an independent research provider.[1] 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.[2] 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 [3] and not in a segregated client account. Moves included in MiFID II such as the creation of Research Payment Accounts (RPAs) aim to address this issue.

References

  1. ↑ "IND-X Advisors | Home" (PDF). Retrieved February 29, 2012.
  2. ↑ "Example of a CSA" (PDF). Archived from the original (PDF) on 2015-03-19. Retrieved 2012-02-29.
  3. ↑ Are CCAs Safe? -- Growing Counterparty Risk Drives The Buy Side To Rethink Client Commission Agreements And Consolidating Broker Relationships Archived 2014-06-21 at the Wayback Machine
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