The Importance of Research and How You Pay for It
Christopher Tiscornia – Westminster Research Associates, which is owned by Cowen Inc., has always been a strong proponent of allowing the use of client commissions to pay for research, particularly through commission sharing arrangements (CSAs). In the simplest form, trades are executed with a broker-dealer, generating commission credits that are housed in a CSA account with a broker-dealer such as Westminster, a pioneer in the business. These credits can then be used to acquire research from a variety of sources, including independent research boutiques as well as the research departments of larger investment banks in accordance with Section 28(e) of the Securities Exchange Act of 1934. As will be discussed here, we believe it is important that managers continue to have the flexibility to use commissions to acquire research.