The Harvard Law School Forum on Corporate Governance https://corpgov.law.harvard.edu The leading online blog in the fields of corporate governance and financial regulation. Sun, 12 Apr 2026 11:30:18 +0000 en-US hourly 1 https://wordpress.org/?v=6.5.8 https://corpgov.law.harvard.edu/wp-content/uploads/2024/02/cropped-photography-4-e1706898544564-1-32x32.png The Economics of Soft Dollars: A Review of the Literature and New Evidence from the Implementation of MiFID II – The Harvard Law School Forum on Corporate Governance https://corpgov.law.harvard.edu 32 32 The Economics of Soft Dollars: A Review of the Literature and New Evidence from the Implementation of MiFID II https://corpgov.law.harvard.edu/2020/10/26/the-economics-of-soft-dollars-a-review-of-the-literature-and-new-evidence-from-the-implementation-of-mifid-ii/?utm_source=rss&utm_medium=rss&utm_campaign=the-economics-of-soft-dollars-a-review-of-the-literature-and-new-evidence-from-the-implementation-of-mifid-ii https://corpgov.law.harvard.edu/2020/10/26/the-economics-of-soft-dollars-a-review-of-the-literature-and-new-evidence-from-the-implementation-of-mifid-ii/#comments Mon, 26 Oct 2020 13:37:26 +0000 https://corpgov.law.harvard.edu/?p=134009?d=20230309151030EST Posted by Howell Jackson (Harvard Law School) and Jeffery Zhang (Board of Governors of the Federal Reserve System), on Monday, October 26, 2020
Editor's Note:

Howell E. Jackson is the James S. Reid, Jr., Professor of Law at Harvard Law School and Jeffery Zhang is an Attorney in the Federal Reserve’s Legal Division. This post is based on their recent paper. The views expressed in this post are those of the authors and do not necessarily reflect those of the Federal Reserve or the United States government.

For nearly half a century, the bundling of research services into commissions that paid for the execution of securities trades has been the focus of both policy discussion and academic debate. The practice whereby asset management firms make use of investor funds to cover the costs of research, known as “soft dollar” payments in the United States, resembles a form of kickback or self-dealing in that the payments allow asset managers to use investor funds to subsidize the cost of the asset managers’ own research expenses. On the other hand, the production of information on the value of securities arguably promotes the development of capital markets and might be understood as a public good, benefiting both investors and the economy more generally. These competing perspectives on bundled commissions have, over the decades, produced a standoff between investor advocates in favor of unbundling and financial industry interests committed to retaining a familiar, albeit opaque, business practice.

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