What exactly is a soft dollar commission

I am not really very well versed with some investment terms. Was wondering what soft dollar commission exactly is.

it’s basically a commission that your broker doesn’t actually keep, but sends on your behalf to some other service provider or broker.

In asset management and securities industries, soft dollars are the benefits provided to an asset manager by a broker-dealer as a result of commissions generated from financial transaction executed by the broker-dealer for client accounts or funds managed by the asset manager.


I recommend to read very good explanation in

Investments / W.F. Sharpe, G.J. Alexander, J.V. Bailey

no idea how it’s defined in the curriculum but in the real world you can send soft dollars to other brokers/research providers and are defined ahead of time (i.e., your commission rate is $2 per share, $1 of which is “soft”)