Frequently Asked Questions

What are "Soft Dollar" Programs?

A Soft Dollar Program is an arrangement between a broker dealer and a money manager whereby the money manager is able to use agency commission dollars to pay for research and brokerage expenses of the fund.

What is Directed Brokerage?
Directed Brokerage is different from Soft Dollars, since the actual account owner/plan sponsor, not the money manager, is the beneficiary. Directed Brokerage is usually in the form of paid expenses or commission recapture.

What types of trades are eligible to soft dollar? Directed Brokerage?
Agency trades and riskless principal transactions are eligible for soft dollars. Principal transactions are not eligible for soft dollars--although they may be allowable in directed brokerage programs.

What services can be paid for using soft dollars?
Expenses that are incurred by the money manager to help him/her make investment decisions are typically covered. Research and brokerage services are the most common expenses paid for with soft dollars.

What is Section 28(e) "Safe Harbor"?
Section 28(e) of the Security and Exchange Act of 1934 permits certain fund management expenses to be covered under a "safe harbor" provision. The safe harbor gives fund managers the ability to legally and ethically offset fund management costs using soft dollars.

Can I trade with brokers other than Nomura?
Yes. Nomura can step-in trades from other brokers and apply the commissions to your soft dollar account.

What must I disclose to participate in a directed brokerage program?
For plan sponsors, no special documentation is required. For hedge funds, a copy of the partnership papers may be necessary.

Will Nomura pay invoices even if my soft dollar balances are insufficient?
Yes, Nomura will cover any short-term balance deficiencies to ensure your vendor payments are made in a timely manner.

What is the ratio?
The ratio determines how much of the gross commission dollars will be applied to the soft dollar account. It is calculated as follows: Commission / ratio = amount to soft account In other words, suppose you have a 1.5 ratio and you pay a gross commission of $.04/share. In this scenario your soft dollar account will be credited for about $.027/share.

What will either of these programs cost to maintain?
There is no charge. NSI provides this as a value added service to our clients.

Why choose Nomura as your soft dollar broker?
Nomura provides quality execution, auto-trading strategies, organic order flow and a self-clearing platform that is seamlessly integrated into our web-based Soft Dollar and Directed Brokerage programs. We are heavily technology leveraged to ensure our clients have the most current information regarding trades, commissions and vendor payments. Finally, we are staffed with experienced professionals to assist you with both the trading and administrative issues surrounding soft dollar and directed brokerage programs.