3. The research provider receives payment for its services through a pool of commissions previously agreed by the fund manager and the execution broker, should be set aside for research services; A client commission agreement, as defined in the SEC`s interpretive guidelines published in July 2006, is an agreement whereby a fund manager may agree with one of its exporting brokers to place a portion of the commissions generated by trading for its accounts in a «pool of funds.» This fund manager may later require the broker to make payments under this pool to suppliers of certain research products or services on his behalf. Another important element of the credit risk solution is the more frequent payment, at least quarterly, of research commission balances. In addition, quarterly votes by brokerage agents are practically mandated to justify distribution and the need for an integrated and systematic solution is also ordered in the services. Goldman`s letter to the SEC clearly sought to determine whether the research providers participating in their Research XPRESS platform had to be registered brokers for clients to order Goldman Sachs to pay them from a pool of customer commissions. In other words, Goldman wanted to ensure that search providers did not need to be brokers to be paid with a CCA. In other words, as long as the above criteria are met, research payments from this pool of commissions are no longer commissions. Therefore, U.S. fund managers have the freedom to pay any research provider – B/Doder or not – from this pool of commissions.

To understand the confusion caused by the letter «No Action,» it must be kept in mind that historically, the only U.S. companies that could have «split or share commissions» were registered brokers. As a result, many boutique search companies have become registered broker traders to be paid through shared commissions over subscriptions. Reducing counterparty risk by holding pools in a single premium or aggregation broker – managing the complexity of the various elements of commission management; Avoid information leaks through CSA payments on search models; More objectivity and granularity in the broker verification process. The reason was that the allocation of commissions could result in extremely high payments if the research provider actually created added value, while the subscription fees did not change depending on the value the research brought to the manager`s investment process. New York, NY – The SEC recently issued a non-action letter in response to a question from Goldman Sachs about whether research providers who participated in their XPRESS Research platform should be registered as brokers to be paid by a pool of client commissions.