Commission sharing agreements mark big trading houses’ newest attempt to win mutual fund companies’ business, while offering the array of research they seek, according to The Wall Street Journal. In response to an increasing demand for more transparent costs and unbundling of fees, commission sharing agreements to fund companies allow mutual fund managers to simply tell traders what research they want, and how much to pay for it. The brokerage house then pays for the research out of their trading commissions. The idea is to stop mutual fund companies from partnering with scores of separate brokerages, thereby concentrating their lucrative trading business. In the past, when one fee bought both trade execution and research, mutual funds would contract with as many as 100 different trading houses to ensure getting the widest possible array of? research. “The biggest ‘pro’ is that you can trade with firms that are great trading firms and obtain great research from great research firms—you don’t necessarily have to mix those things together,” said Richard Whitney, fund manager and head of the committee overseeing commission allocation at
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