The Bank of New York Says Regulatory Guidance on Research and Commissions Affirms Value of Independent Research
NEW YORK, JULY 19, 2006 -- The Securities and Exchange Commission’s Final Interpretive Guidance regarding research and commission practices supports the value provided by independent research, according to comments today from The Bank of New York.
The final guidance reaffirms the continuing vitality of Section 28(e) of the Securities Exchange Act of 1934, the so-called “safe harbor” that allows research to be paid for with trading commissions. While refining the definition of “brokerage and research services” that fall within Section 28(e), the new guidance states definitively that the safe harbor applies equally to independent research and proprietary research.
Joseph M. Velli, senior executive vice president of The Bank of New York and head of BNY Securities Group, said, “After due deliberation, the SEC has reaffirmed the essential link between the research that supports investment decisions and the execution of those decisions through trading. The final guidelines should prove to be a positive catalyst for the independent research market and encourage money managers to seek out whatever research is most likely to improve performance.”
John D. Meserve, president of BNY Research, Commission and Payment Services LLC, said, “The SEC has reiterated that independent research deserves equal protection with proprietary research under the safe harbor. In addition, we believe that the new guidance facilitating commission sharing arrangements will improve money managers’ ability to seek best execution while obtaining best-of-breed research with the same commission.”
The Bank of New York Company, Inc. recently announced that it is joining forces with Eze Castle Software and GTCR Golder Rauner, LLC, a private equity firm, to form a new company that will bring together BNY Securities Group’s trade execution, commission management, independent research and transition management businesses with Eze Castle Software, a leading provider of trade order management and related investment technologies. The new firm, to be called BNY ConvergEx Group, is expected to be established by September or October, pending regulatory approval. Velli will serve as the chairman and chief executive officer of BNY ConvergEx Group.
BNY Securities Group is the global agency brokerage, clearing and financial services outsourcing sector of The Bank of New York Company, Inc. It provides institutions, broker-dealers and corporations with a broadly diversified suite of services and “The Power of Choice” through multiple business models. Through its broad range of businesses, BNY Securities Group offers creative solutions in trade execution, commission management, independent research, securities clearing and financial services outsourcing. BNY Securities Group is the largest provider of commission management services and offers global execution and clearing services in over 80 markets with offices in the U.S., Europe, Asia, and Australia. BNY Securities Group is an organization consisting of several broker-dealers and other companies.
The Bank of New York Company, Inc. (NYSE: BK) is a global leader in providing a comprehensive array of services that enable institutions and individuals to move and manage their financial assets in more than 100 markets worldwide. The Company has a long tradition of collaborating with clients to deliver innovative solutions through its core competencies: securities servicing, treasury management, asset management, and private banking. The Company’s extensive global client base includes a broad range of leading financial institutions, corporations, government entities, endowments and foundations. Its principal subsidiary, The Bank of New York, founded in 1784, is the oldest bank in the United States and has consistently played a prominent role in the evolution of financial markets worldwide. Additional information is available at www.bankofny.com.
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