A Greenwich Associates survey released today indicated that money managers think a British government proposal cracking down on so-called "soft commissions" won't improve firms' profitability. The proposed regulations by the Financial Services Authority would target broker payments for managers' third-party goods in exchange for trade-execution business. Greenwich's study found that some firms plan to offset these costs by trimming their broker lists, cutting back on sell-side research and increasing their use of electronic trading. Some will pass on the costs to clients, the study also found.
Jane Collins, managing director at Credit Suisse Asset Management in London, said firms in Britain would be unable to pass on the extra costs through higher fees because of tough competition.