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Joanna Fields
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Navigating Cybersecurity on a Stretch of "Regulatory Rapids"

In this shared commentary, Aplomb Strategies writes that when considering a firm’s governance structure, a holistic approach makes the most sense.

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November 1, 2004

Buyside Traders Clash on Soft Dollars

By Gregory Bresiger

Buyside firms could get squeezed if soft-dollars services are finally torpedoed by the regulators. That's the view of buysider Cheryl Cargie, the head trader at Ariel Capital Management. Cargie says small buyside shops like hers still need soft dollars - to "level the playing field" with larger outfits such as American Century.

Cargie, speaking on a panel at the STA annual conference in Boca Raton, defended certain soft-dollar practices. American Century was represented on the STA panel by head trader John Wheeler.

Cargie clashed with Wheeler, who said his firm opposes soft dollars. However, Cargie said that with soft dollars she does not pay up for research, which helps her to obtain the same sort of execution services as American. Wheeler dismissed this argument. "The fact is you are always paying up with soft dollars," he said. Wheeler said today it is possible to obtain executions free of soft-dollar arrangements. "You can work out a deal with a vendor."

John Meserve, president of Bank of New York's Westminster Research Associates, criticized a recent proposal by the Investment Company Institute to ban third-party research from permitted soft-dollar services. Meserve said the ICI proposal was not popular. Some mutual fund complexes adopted the ICI proposal yet they continue to use brokers' proprietary' research, he added. Panel moderator, Lee Pickard, said the industry already had enough disclosure and did not need more, despite the signals from the regulators.