Cogent Consulting has tackled the sometimes sticky process of how the buyside pays the sellside through client commission arrangements, also known in Europe as commission-sharing arrangements (CSAs). As more buyside firms adopt CSAs, some have chosen to manage their research and execution payments by aggregating them through a single broker.
Because this could lead to trading and rate table information leakage, Cogent’s CSA Trak offers a solution. CSA Trak lets an investment manager organize and aggregate his execution and research payments himself, rather than through the sellside.
While the money manager views one aggregated pool, the system manages all payment notices to the brokers.
“[CSA Trak] keeps track of which brokers have permission to pay which other brokers,” said Robin Hodgkins, president of Cogent Consulting. “And we do all of the notifications to the brokers of whom to pay. So, no money has to move, no data has to move, and the research provider is protected.”
Though created for the buyside, brokers can view their own accounts with institutions through a portal.
CSA Trak uses a rate table organized by broker that’s inaccessible to prying eyes, so brokers can’t compare commission rate information. Brokers can also see their trade details, do reconciliations and look at payment requests.
CSA Trak also helps institutions that manage their payments with more than one broker.
“The buyside doesn’t want to have to log into 10 or 15 different CSA broker Web sites, which is just incredibly cumbersome,” Hodgkins said.
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