29 November 2007

IOSCO report on soft commissions arrangements for CIS

IOSCO published its report on Soft Commissions Arrangements for Collective Investment Schemes, concluding that that these kinds of arrangements present a challenge to regulators. The arrangements can provide useful benefits to CIS investors, but can be subject to abuses. The Standing Committee on Investment Management (SC5) will continue to monitor regulatory developments related to soft commission arrangements to determine whether general principles can be developed.

Given the importance of soft commissions and the conflicts they present, some jurisdictions currently are reviewing the regulation of soft commission arrangements. The mandate also indicates that SC5 may, if necessary, seek to develop general principles concerning soft commission arrangements involving CIS and CIS operators.

At this time, the development of general principles regarding soft commission arrangements would not be appropriate because the relevant law in many jurisdictions is changing. SC5 will undertake to monitor those changes over the next two years and will determine whether and how general principles may be developed, especially in the areas of the limitation of the goods and services that can be acquired under soft commission arrangements, and prior and periodic disclosure of soft commission arrangements.

Report

© IOSCO