Soft Dollars

Since the Soft Dollar Standards are voluntary for CFA members/candidates…is it okay to follow the Soft Dollar Standards with some clients and not with others? Or is it all or nothing?

You have to comply on a firm wide basis, it is all or nothing. In addition, by using Soft Dollars on only some clients you are probably violating Standard III(B) Fair Dealing.

I saw a question posted in another thread that said firms must provide a disclosure saying that soft dollar standards are available by contacting the firm. i assume if a firm doesn’t comply then there is no need for the disclosure, but if they do comply, they have to make the standards available…

Where does it state it has to be on a firm wide basis? I just read through the reading on Soft Dollars and I can’t seem to find it.

Taken from CFA Soft Dollar Standards PDF: “On a firmwide basis. A description of the products and services that were received from Brokers pursuant to a Soft Dollar Arrangement, regardless of whether the product or service derives from Proprietary or Third- Party Research Arrangements, detailed by Broker”

Thank you! I was hoping to see if the following is correct about Soft Dollar Standards. Agency Trades 1 - Allowed to use other brokerage to purchase products/services as long as it averages out in the end. Principal 1 - If there is a law you cannot use brokerage to benefit others, only for the client who generated the brokerage. 2 - If there is a law, client can consent but you still cannot act. 3 - If there is NO law, we can act just like an Agency Trade. Client-Directed 1 - Brokerage is not to be shared. Cannot use other brokerage to purchase products/services for Client-Directed. Does this make sense?

Point 3 under principal is flagrantly wrong. Absent a law stating that brokerage is only for the client who generated it, you need written consent to ues their brokerage for the benefit of others, directly opposed to agency in which you DO NOT need consent so long as it averages out in their benefit over the long term.

ooopppsss… Thanks for catching that. I’m assuming it has to average out in the end if you do get consent because if it doesn’t average out the client wouldn’t give consent. Does that make sense?