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“Risk and Regulation Still Key Concerns for Commission Sharing Firms Despite Commission Agreements Growth.”

MPI Europe, the specialist financial services consultancy, publishes today the results of our annual market wide survey for brokerage commission sharing agreements.

The analysis of usage and trends in commission management indicates that regulation continues to shape changes for firms using commission sharing agreements (CSAs) and drive the need for rigorous controls around the granularity of data to provide the transparency demanded by regulators. This in turn has raised the perception around risk and is causing increased concern.

For the fifth year running the number of responses to the survey has increased, highlighting the notable interest in this area.

Key trends include:

  • CSA Growth Continues - 54% of firms have increased the number of CSAs in the last year. This growth trend looks set to continue with virtually all firms looking to continue their current use of CSAs or increase them in the coming year.
  • Risks Increasing – 90% of asset managers believe risk from regulation is higher now than in 2013 and the perception from all types of firm is that all forms of risk for the market are increasing.
  • Regulation Still Key Concern - All types of firm expressed their unease about regulation. 63% of firms indicated a medium–high risk for their businesses and the

market. The trend is more pronounced for buy side firms.

MPI surveyed a range of financial sector firms to understand the key trends, challenges and opportunities in the use of commission sharing agreements. The survey was conducted during July and September 2014 and gained responses from almost 90 asset managers, brokers and research providers. This annual survey has run since 2010 and has shown strong and increasing interest year on year as MPI looks to communicate with those involved in the market to provide insight and commentary.