Q & A: Discussing Commission Management

Industry Insight

April 24, 2015

Commission management is rapidly becoming a top priority for both buy- and sell-side investment firms. Buy-side firms are looking to balance their need to pay for research while also achieving best execution for their investors, while sell-side firms are looking for feedback on what they can do to gain larger shares of the commission pool. Eze Software’s product suite enables firms to manage and streamline these processes through a powerful offering that combines a robust commission management toolkit with a specialized commissions consulting team. Justin Tourtelotte, director of Eze Software’s compliance and commissions consulting service, oversees this specialized team of more than 20 professionals dedicated to providing consultative, high-touch service to more than 100 clients using our commission management tools. The team is staffed with expert consultants with an average tenure of more than 4 years of experience and over 80 implementations under their belt. The commissions consulting team drives the implementation process and can advise you on industry trends and best practices, including changing regulations and reporting. Post-implementation this team remains your primary contact to pursue additional projects and for continued training and knowledge sharing. We sat down with Justin to hear about the challenges his clients are facing and how our products enable them to meet these challenges.

What’s driving the demand for commission management software these days?

There are a number of trends driving demand for flexible commission management applications. At the forefront are regulatory changes, specifically those stemming from MiFID II in Europe. Investment firms will need to adapt and comply with these changes, which include the unbundling of research commissions.  In the United States, registered investment advisors are also seeking to satisfy the SEC’s requirements. Firms are looking for solutions that will allow them to track research budgets and payments down to the account level, which regulations will likely require, and comply with the various jurisdictional regulations.

What are the advantages to using a commission management system?

A commission management system enables you to build a repeatable, documented process for evaluating brokers, establishing budgets, managing budgets, and making payments. Outsourcing can be costly and utilizing Excel or other manual programs to manage commissions is inefficient, time-consuming, and reliant on manual data manipulation. A system like ours provides you with an easy-to-use toolkit to create and manage CSA relationships, monitor budgeted research spend versus actual spend, reconcile CSA balances & payments, and report both internally and to clients -  all from one system.

What is Broker Review?

Broker Review is a new web-based vote tool that is available off of our new cloud offering. It is a highly flexible and configurable vote tool that allows clients to create and manage an election that matches their organization’s structure and budgeting needs.  New functionalities include enhanced administrative functions, where the voting administration can change the voting format on their own.  This is an important feature to help managers adapt the vote as their organization and regulation changes.

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