For the second time Fidelity Investments has reworked a deal to sever its stock trading from a brokerage's research. This week the Boston Behemoth said it will purchase stock research from Deutsche Bank Securities using its own funds. In October, Fidelity reached a similar arrangement to cease using soft dollars with Lehman Brothers.
"We hope it will lead to some broader changes in the industry, but we're not doing it based on what we hope might happen. We're doing it because it's best for our fund shareholders," Eric D. Roiter, Fidelity general counsel, told the Boston Globe
The severing of the relationship between trading and research comes as the SEC looks into whether some fund firms, including American Funds. improperly used directed commissions. So far as is known, Fidelity is not one of the firms the SEC is investigating.
The SEC also released new soft dollar rules in October that further restricts how they may be used. Roiter described that rule change as a "pretty moderate release" that does not radically change how soft dollars can be used.
Lehman Brothers and Deutsche Bank are Fidelity's two largest external trading partners. The fund firm also trades through affiliated brokerage firms.
Fidelity officials said that they are "continuing to engage other brokers in discussions in an effort to reach comparable arrangements."
To date, Fidelity is the third fund firm along with Janus Capital and MFS Investments to say that they will not use soft dollars to pay for research.
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