STANLIB enhances the quality of its research through the application of Commission Sharing Agreements.
Commission Sharing agreements originated from the need to provide clients of investment managers with best execution services when buying and selling securities. These arrangements enable the splitting of brokerage fees into two parts: the execution portion and the research portion.
The execution portion is retained by the broker rendering the execution service as payment while the research portion is applied by the broker, at the instruction of the investment manager, to pay for research services provider to the investment manager for the benefit of the investment manager’s clients.
The investment manager would then be in the position to obtain execution services and the research services from different providers at no additional cost to clients.
The Commission Sharing Agreement is only applicable to research that
- adds value to the investment or trading decisions on behalf of clients,
- represents original thought,
- has intellectual rigour involves analysis of data to reach meaningful conclusions.