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Myners’ hard line on soft dollars

       
Paul Myners

It may have been buried towards the back of a long report but it has certainly elbowed its way into the spotlight since. A call by Paul Myners, in his review of the UK's investment industry, to address how and why fund managers pay commissions to brokers has sparked a heated debate.


At the heart of his proposal is the idea that there is too cosy a relationship between brokers and fund managers. The main target of his criticism is the practice of brokers giving fund managers soft commissions, or soft dollars, in return for their orders.


Myners, the chairman of Gartmore, was clearly aware of the possible reaction his views might provoke. "I think a lot of people were surprised by my proposals on commissions - after all, this is about a 50-year-old tradition," he said.


Although soft commissions, or soft dollars, most commonly involve the broker providing research to the fund manager in return for trading commissions, other forms of payment are sometimes handed over.




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