So I understand the differences between principal and agency trades but does anyone know why principal trades are treated differently with respect to only benefitting the client account that generated it (unless consent is given and client is not under ERISA)? I just cannot see why soft dollars would be treated differently if they were generated via the spread versus flat commissions?
This might be one of those things where I should just remember it and move on but I am just curious about the intuition behind this.