Fidelity to Scale Back ‘Soft Dollar’ Deals

From Bloomberg News

Fidelity Investments, the world’s largest mutual fund manager, said Monday that it would stop paying brokers extra commission money in exchange for market data, joining companies such as MFS Investment Management in scaling back “soft dollar” arrangements.

Soft dollars mainly involve fund managers receiving services, such as financial information, in exchange for sending trades to the companies.

Boston-based Fidelity will start paying directly for financial information beginning next month, company spokesman Vincent Loporchio said.

Money managers in the U.S. have been split on the future of soft dollars. Putnam Investments, the sixth-biggest U.S. fund company, has recommended that the Securities and Exchange Commission eliminate the arrangements, while Fidelity has opposed abolishing them and has asked the SEC to require better disclosure.


The decision to pay directly for market data will cost Fidelity between $40 million and $50 million this year, Loporchio said.