July 2008

Commission recapture - increasing investment returns

In today's uncertain economic environment, managing your fund expenses, controlling costs and helping to bring investors greater returns can be challenging. One highly effective way to control transaction costs is to implement a commission recapture program.  

How does commission recapture work?

A commission recapture program returns a portion of trading commissions directly back to your fund. Typically, a portion of the commissions generated by a fund is usually used to pay for fund research. Under a commission recapture program, the portion normally used to pay for research is instead rebated (recaptured) directly to the fund. This direct benefit preserves fund assets and, by lowering the operating expenses, increases the fund's cash flow and its net investment returns. 

Features of a commission recapture program

Commission recapture programs are designed to enable your investment managers to process trades in a manner that is completely consistent with your normal trading process. It is easy to start and maintain a commission recapture program. The program has no fees, volume requirements or time limits.

Clients have a dedicated, highly skilled client services professional assigned to ensure the smooth implementation, operation and management of commission recapture programs. Clients also benefit from online access to your records and a proprietary accounting system designed specifically for commission recapture. 

How can CIBC Mellon help you?

CIBC Mellon has selected BNY ConvergEx to be the preferred provider of commission recapture services for our clients. BNY ConvergEx Group, an affiliate of The Bank of New York Mellon, is a premier global agency trading and investment technology firm. BNY ConvergEx Group's LJR Recapture Services (LJR) unit is a pioneer in commission recapture, having originated the first commission recapture program in 1986. With a growing list of over 2,000 client funds worldwide - whose assets total more than $3 trillion - LJR specializes in helping clients save on commissions, conserve assets and benefit participants. Clients include annuities, pension plans, pension schemes, endowments, mutual funds and more.

If you are looking for ways to reduce fund costs, pass on the savings to your clients and increase the returns to your fund, please contact your relationship manager.

By Christian Kraus, vice president, sales, LJR Recapture Services 

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Trade Talk® is provided for general information purposes only and CIBC Mellon Global Securities Services Company, CIBC Mellon Trust Company, CIBC, The Bank of New York Mellon Corporation and their affiliates make no representations or warranties as to its accuracy or completeness. Readers should be aware the content of this publication should not be regarded as legal, tax, accounting, investment, financial or other professional advice nor is it intended for such use.