Guidelines on soft dollar deals | South China Morning Post
  • Sun
  • Mar 29, 2015
  • Updated: 9:03am

Guidelines on soft dollar deals

PUBLISHED : Friday, 31 March, 1995, 12:00am
UPDATED : Friday, 31 March, 1995, 12:00am

HONG KONG fund managers have been given guidelines on how to reveal previously undisclosed deals with brokerages.


The Hong Kong Investment Funds Association has introduced draft forms of wording to allow fund managers to disclose 'soft dollar' arrangements with brokers in which research tools are provided for fund managers in return for guaranteed business.


The association was encouraged to develop forms of wording for disclosing the deals by the Securities and Futures Commission (SFC), which last year announced a crackdown on soft dollar deals and commission rebates.


Commission rebates will soon be outlawed and any rebates will be added to the fund rather than being paid to the manager.


In commission rebates brokers pay fund managers back part of the transaction commission.


Soft dollars will not be outlawed but the SFC has asked for more accurate disclosure of information.


Association chairman Roger Pyrke said: 'What we have tried to achieve in our drafting is something that is clear and understandable to investors, trustees of pension funds and clients in other forms of discretionary management.' The association said there was a need for managers to define policies and limits on soft dollar commissions.


From the middle of this year, commission rebates in unit trusts will be paid into the fund rather than to the fund managers.


The association has suggested to managers that a clause replacing one reserving the right to take rebates should be added to fund documentation.


Share

For unlimited access to:

SCMP.com SCMP Tablet Edition SCMP Mobile Edition 10-year news archive
 
 

 

 
 
 
 
 

Login

SCMP.com Account

or