Am I the only one finding this section impossible to follow? -The standards are all over the place no logical cohesion to it. - my bitterness cuz getting more than 50% wrong with the questions - if someone of you can pls write down the salient points of soft dollar standards.
This is my 2nd time taking the exam and i find the whole concept still very obscure, even though i memorized the essential. I’ve asked a few other friends doing the level 3 and say the same thing.
I have read through many times…I feel i could write down the essentials, yet when it comes to the questions, it is as if they are not in English, which is supposed to be my mother tongue. Same with ROS, I feel i have an understanding, yet when it comes to ROS questions I am fine,what is it with soft $$$$???
I have the same problem.
My advice. Review the required standards vs. the recommendations. That’s where I get tripped up. When they ask for a most likely or least likely answer, you need to know the differnece between complying with required or recommended standards.
The formatting is messed up, but below are some notes I prepared for Soft Dollars and Research Objectivity Soft Dollars - Brokerage is the property of the client - Investment Managers must obtain best execution, minimize transaction costs and use client brokerage to benefit clients - Ensure Research only helps in Investment Management, not in General Management(McKinsey Quarterly vs Equity Research) - If there ever a question about research, manager must pay not client’s brokerage - Disclosure and transparency to clients on use of soft dollar arrangements - Mixed use is allowed, as long as firm pays for its part - Trades not subject to fiduciary duty, one can use research, as long as disclosure to client is made - Do not use brokerage from another client to pay for products purchased under client directed brokerage - Clients must be provided with a Soft Dollar Statement at least annually Research Objectivity Standards a. Research Objectivity v. Formal written objectivity and independence policy vi. Supervisory procedures vii. Annual certification by a senior officer b. Public Appearances viii. Covered employees must make conflicts of interest public c. Adequate And Reasonable Basis ix. Single committee should be charged with reviewing and approving all research reports and investment recommendations d. Investment Banking x. Chinese walls e. Compensation xi. For Research Analysts, it should directly related to the quality of the research and not IB or Corp Finance business generated f. Subject Companies xii. Prior to publication, must not make any part of the report that might signal analyst’s rating xiii. or make any promises regarding ratings g. Personal Investment xiv. Do not allow trading contrary to firm’s recommendation, unless extreme hardship xv. No frontrunning xvi. No IPO investing by family or analyst h. Issue timely research i. Compliance and Enforcement j. Disclosure k. Rating System, buy-hold, market perform, outperform