Cogent & MPI Europe Team to Implement Commission Sharing Arrangement Solutions in Europe

10 March 2009

Cogent Consulting LLC and MPI Europe have developed a strategic partnership to help institutional brokerage and investment managers in Europe implement and manage Commission Sharing Agreements (CSA) faster and more easily. Following the September 15th Lehman UK bankruptcy, more managers want to spread their risk by using a greater number of CSA brokers, creating demand for the right technology platform to manage CSAs efficiently.

Under the agreement, MPI will implement Cogent’s CSA Trak™ and CSA Trak BD™ solutions for buy and sell side firms in the UK and on the Continent. CSA Trak, from US-based Cogent, a pioneering developer of cross-broker commission management systems, is the leading platform for helping institutional brokers and their clients manage CSAs. CSA Trak turns the complexity of setting up these arrangements with a large number of sell and buy side accounts into a simple web-based solution that is as easy as using an online banking account. London-based MPI is a leading consultant to financial service firms in Europe, primarily focusing on the use and implementation of technology, with particular expertise in risk and operational applications.

CSAs represent the biggest single change this decade in the way investment managers pay for services. Approved by the FSA, other European regulators, and the SEC, these arrangements have grown significantly in countries such as the United Kingdom and France. Through CSAs, investment managers can use research commissions (defined as commissions above pure execution rates) to pay their research providers for their best research. Rather than trade directly with every research firm, CSAs allow for a smaller list of counterparties, who are then used to pay third party research providers.

The September 15th Lehman UK bankruptcy underscored the dangers of investment managers building up large commission pools at a small number of brokerage firms, should one of the brokers go out of business. As a result, leading institutions are starting to use a greater number of CSA brokers, rather than the "aggregation" or single broker-driven model to manage all of their clients’, hence a greater number and variety of brokerage firms are interested in offering CSAs to their institutional clients. “This is a clear reversal from earlier trends in aggregating money at just one broker and vastly helps reduce counter-party risk,” noted Robin Hodgkins, President of Cogent.

MPI first recommended CSATrak as part of an assignment from a large global institutional brokerage firm with major operations in the UK and Asia to review all third-party CSA solutions versus developing systems in house. “We found CSA Trak represented the best choice for our client,” said John Cant, Managing Director of MPI Europe. "It was the most robust, flexible, easy to use, and cost-efficient solution. Also the platform is tried and tested -- we found that a growing number of broker and asset management firms have been using it over the last two years. Cogent understands the needs of institutional brokers and investment managers."

"There are few professional consultants who understand institutional level financial technology better than MPI Europe," said Mr. Hodgkins. "As a result of this agreement, we hope to enhance our business offering across Europe and look forward to helping more brokerage and investment firms."



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