GREENWICH, Conn. — Soft-dollar spending by U.S. institutional investors fell 10% during 2004, but institutions are waiting to learn the outcome of a Securities and Exchange Commission review before cutting deeper into those expenditures, according to a Greenwich Associates report.
Institutional investors interviewed by Greenwich between Nov. 29 and Feb. 18 decreased their use of soft-dollar commissions to purchase third-party research and services to a combined $1.13 billion in the 12 months preceding the interviews from roughly $1.25 billion a year earlier. Greenwich interviewed equity portfolio managers and traders at nearly 400 institutions that invest in domestic equities.
Greenwich found that 73% of the institutions reported using soft dollars over the past 12 months, compared with 82% in the prior year and 86% a year earlier.
The Greenwich report said the SEC has indicated it will issue soft-dollar recommendations in 2005. John Nester, an SEC spokesman, said the agency's soft-dollar task force "is still in the process of developing recommendations" and has no timeline for issuing them.
Melissa De Vries, associate director-institutional research and marketing at Greenwich, wouldn't speculate on upcoming SEC recommendations but noted it seems that regulators have "softened their stance" on soft dollars. It's a matter of "determining what's appropriate" for soft-dollar spending, she said.