Registered investment advisers in the process of planning an annual compliance review will generally include a review of their best execution processes and their use of so-called “soft dollars.” Managers that trade in fixed-income securities may find it useful to review a no-action letter issued earlier this year by the Division of Trading and Markets of the U.S. Securities and Exchange Commission. This letter, granted to Carolina Capital Markets Inc.,[1] confirmed that institutional asset managers, in reliance on the safe harbor of Section 28(e) of the Securities Exchange Act of 1934, may purchase eligible third-party brokerage and research services with commissions generated by qualifying transactions in fixed-income securities.
Click here to read more about the background on the Section 28(e) safe harbor, the eligibility of fixed-income commissions under the Section 28(e) safe harbor and the 2013 Carolina Capital No-Action Letter.