Fidelity’s call for trading cost itemization and subsequent pan on soft dollars could hit small firms hard, experts tell Reuters. And a smaller playing field could make the industry less competitive, they say.

While Fidelity, with $876.2 billion of assets under management, can afford to place trades without any research quid-pro-quo benefits, other firms are not as well equipped. "You’d find that a lot firms would cease to exist," Grady G. Thomas, president of Interstate Group, an independent research firm, told Reuters.

But other, more neutral observers of the industry believe the transparency would push trading costs lower, thereby benefiting shareholders and the entire industry. "Frankly, this is a fight the industry should have taken up years ago," said Don Phillips, managing director at Morningstar. "The more you look at soft dollars, the harder they are to justify. The full 5 cents [per share] is not the true cost of trading. The true cost in some subset, and the price is being inflated by soft-dollar goods."

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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.

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