The age of transparency is here. While the SEC has not yet created new disclosure rules, many major B/Ds are already providing more information on how they are compensated by funds. The Wall Street Journal examines the deals cut by broker-dealers for distribution of fund shares this morning.

Why are broker-dealers making the information available even before they are required to:

"In view of the questions about ethics and governance within the industry, we thought it was in the best interest of our clients and the firm to be forthcoming about this," the paper quotes Tony Matteria, a spokesman for Wachovia Corp., as saying.

Despite the move to disclose more information by these brokerages, SEC officials told the paper that they do not believe investors are yet receiving enough information and that they are planning to enact new disclosure rules. They do admit to being encouraged by the trend, though.

"I do think it's a positive development that firms have undertaken to improve their disclosure practices in this area. But there still could be substantial benefit to having a uniform disclosure regime," Annette Nazareth, the SEC's director of market regulation, told the WSJ.

That revelation is not surprising. The SEC needs to codify rules to govern all 7,000 broker-dealers, not just rely on the goodwill of the best actors in the industry. Still, the types of disclosure now being made likely provides an example of what will become the minimum needed disclosure down the road. So what are brokerages revealing and how are they doing it?

Most times they are posting information about share class and breakpoints on their Web site, according to the paper. They are also providing the disclosures when investors open new accounts. Another avenue of information is monthly or quarterly statements.

The information disclosed also may include revenue sharing fees paid by funds to gain more prominent shelf space at the brokerage.

How much does that shelf space cost. At Smith Barney stock funds pay 12 basis points, while balanced funds pay 9 basis points. The brokerage arm of Citigroup also revealed the fund firms that paid it the most over the past year (Smith Barney, American Funds, Franklin Resources, Lord Abbett, Salomon Brothers, Pimco and Putnam Investments).

Merrill Lynch started mailing clients a new brochure this week that lists its revenue sharing fees, including 25 basis points on new purchased shares and a trail of up to 10 basis points.

Meanwhile, Wachovia Securities lists 63 fund companies with which it has revenue-sharing agreements and UBS lists 21 fund companies, including which are "Tier 1" funds and that 90 percent of its sales went to Tier 1 funds.  

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