Fidelity expects the move will decrease investors fees, although it did not indicate by how much. Fidelity also anticipates that the elimination of soft dollars will increase its own market data and research costs, but only by $40 million to $50 million a year, Eric Roiter, general counsel of Fidelitys investment management division, told The Journal. "We are simply putting our money where our mouth is," Roiter said. "We hear the consternation about soft dollars."
Those in favor of soft dollars fear that the move by the nations largest fund company will encourage other brokerages to eliminate soft dollars, which, in turn, will cause insightful research by small research firms to dry up. The move by Fidelity could certainly portend a trend, as Fidelitys trades comprise a large portion of the commissions that mutual fund and institutional investors pay each year. Last year, Fidelity paid 53% of the total $1.52 billion in commissions.
Fidelity wrote a letter to the
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The staff of Money Management Executive ("MME") has prepared these capsule summaries based on reports published by the news sources to which they are attributed. Those news sources are not associated with MME, and have not prepared, sponsored, endorsed, or approved these summaries.
