Global agency broker and Nomura Holdings subsidiary Instinet has expanded its pioneering BrokerShare commission sharing arrangement program to include non-broker-dealers.
As a result of the expansion, Instinet will now provide institutional clients with Section 28(e) eligible services obtained from non-broker-dealers, such as independent research providers, through trading commissions on a variable basis rather than a static soft dollar invoice amount.
BrokerShare commission was one of the industry’s first commission sharing arrangement (CSA) programs when first introduced in 2003. It allows institutional clients to consolidate trading relationships and obtain diverse research without sacrificing execution quality. Since it is not a traditional step-out program, trading strategies are not disclosed, nor is trading information released to participants.
The program has grown steadily since its introduction, today including over 200 participants and $15 million in 2006 payouts.
With the program, clients accrue trading commission credits in a BrokerShare account by utilizing Instinet’s global trade execution services, and later direct Instinet to pay participants whose Section 28(e) eligible services they consume. Instinet handles all payments, administration and record-keeping through an online commission management system.