The following guest article was written by John McGough, Jr., a member of the Global Business Development team at financial technology provider Castine, LLC. John has spent over 25 years on Wall Street in various senior commission management and sales roles at firms including BTIG, JonesTrading, StoneX Financial, Prudential Equity Group, and Standard & Poor’s Securities.
A conversational white paper for asset manager leadership evaluating a shift from P&L to CSA
Summary
Since MiFID II became law in 2018, asset managers have experimented with three ways to pay for research: RPAs, P&L, and outside the EU CSAs. RPAs were supposed to bring transparency and eliminate inducements, but they quickly became known for one thing: operational pain. Most managers abandoned them and moved to P&L.
Now the landscape is shifting again. The UK has restored CSA‑style joint payments (Listing Act), and the EU has done the same (2026 Delegated Directive amendments) Brokers are rebuilding CSA infrastructure and buyside firms are reevaluating how they want to fund research going forward.
For managers currently paying out of P&L, the question is simple:
Is CSA now the best option? In today’s market, the answer is yes. CSAs offer transparency, flexibility, economic alignment, and operational efficiency all without the constraints that make RPAs unworkable and P&L too restrictive.
For more information on how to manage CSA’s using “best in breed” technology solutions, click here to see Castine’s suite of services for asset managers.
RPAs: A Model That Looked Good on Paper but Never Worked in Practice
RPAs were created to replace CSAs in the EU by giving managers a dedicated research account funded by client commissions. The idea wasn’t bad. The execution was.
The first issue was the operational burden. RPAs require managers to set up research budgets in advance, run valuation frameworks, hold governance meetings, disclose everything to clients, and reconcile constantly. Even large firms found themselves adding headcount or outsourcing just to keep the RPA machinery running. Smaller firms simply couldn’t justify the overhead.
The second issue was rigidity. RPAs forced managers to predict their research needs at the start of the year and justify every payment through valuation committees. But research consumption doesn’t work that way. It’s dynamic and changes with markets, corporate events, and investment opportunities. RPAs tried to impose structure on something that is inherently fluid.
The third issue was commercial misalignment. RPAs broke the natural connection between execution quality, research value, and broker relationships. Managers lost the ability to reward brokers who were delivering value across trading, corporate access, and research. The commercial relationship became fragmented.
The result was predictable. Academic research confirms that most managers abandoned RPAs and switched to P&L because RPAs were simply too burdensome. They never achieved scale, and they never delivered the practical benefits regulators hoped for.
P&L Funding: Simple, Familiar, but Increasingly Limiting
When RPAs proved unworkable, managers moved to P&L. It was straightforward, predictable, and didn’t require new infrastructure. But over time, the limitations of P&L funding have become more obvious.
The biggest challenge is the research budget compression. When research is funded directly from the firm’s P&L, budgets shrink during down markets at a time when more research and services are required, face constant pressure from CFOs, and never grow alongside trading activity. Over time, this has contributed to the well‑documented decline in research coverage, especially for small‑ and mid‑cap issuers. Managers just don’t have the flexibility to support differentiated providers when every research dollar is competing with technology spend, headcount, and other firmwide expenses.
Funding research from P&L also limits what asset managers can do. If they want to spend more on research halfway through the year, add a new provider, or react to something happening in the market, they usually can’t. The budget is set, and any extra spend means cutting something else and/or seeking approval to secure additional funds. It’s a fixed system that doesn’t match how research needs actually change during the year.
Finally, P&L funding in many cases results in lower overall payments to brokers, weakening the relationships over time. When all research is paid directly out of the firm’s P&L, brokers become less inclined to deliver the same level of service they once provided. Analysts’ engagement diminishes, corporate access becomes more difficult to secure, and event participation declines. Trading relationships lose the economic foundation that traditionally helps to keep the relationship strong.
P&L may be simple, but it isn’t strategic, and it doesn’t give managers the flexibility or support they need in today’s research ecosystem.
CSAs: The Most Effective Research Payment Model in Today’s Market
With both the UK and the EU now allowing research to be funded through trading commissions, CSAs have reemerged as the most effective and balanced way for asset managers to pay for research. They offer a mix of transparency, flexibility, and aligned economic incentives that RPAs never achieved, and that P&L simply cannot match.
One of the biggest advantages of CSAs is transparency. Managers get daily visibility into balances, automated reconciliation, and clear payment workflows. Everything is auditable and trackable. Regulators get the clarity they expect, and managers get a system that doesn’t require committees, valuation frameworks, or layers of governance just to stay compliant.
CSAs also deliver governance without bureaucracy. Asset managers can allocate research payments based on value, monitor consumption across providers, and maintain discipline but without the additional administrative burden that made RPAs so difficult to operate. It’s governance that fits the way research is actually consumed: dynamic, market‑driven, and constantly shifting.
Operationally, CSAs are designed to be a lower lift. They don’t require pre‑set budgets, valuation committees, or client‑level disclosures. They don’t require a new governance structure. What they require is simply a clear, consistent process for allocating research payments; something modern platforms already handle seamlessly.
Economically, CSAs restore the alignment between trading and research. Managers can reward brokers who deliver value, strengthen execution relationships, support differentiated research providers, and connect research consumption directly to trading activity. This is the flexibility that firms lost under MiFID II’s strict unbundling provisions.
And importantly, CSA‑funded research budgets scale naturally with trading. They grow when trading grows. They allow opportunistic research consumption. They support investment processes that respond to markets rather than being constrained by fixed annual P&L budgets. For most managers, this is the single biggest advantage over P&L.
For more information on how to manage CSA’s using “best in breed” technology solutions, click here to see Castine’s suite of services for asset managers.
Why CSAs Make Sense for Managers Currently Using P&L
If you’re currently paying for research out of P&L, CSAs give you three clear advantages.
First, CSAs let you increase your research access without increasing your P&L budget. You can bring in new providers, get more analyst time, and participate in more events, all funded through trading commissions instead of asking the CFO for more funds.
Second, CSAs strengthen broker relationships. When research and trading are re-aligned, brokers have a clear economic incentive to support their clients with broader access, and more meaningful research engagement. The relationship becomes healthier, more balanced, and more durable.
Third, CSAs give you clean, transparent governance without the heavy operational work that RPAs require. You get daily balance visibility, automated reconciliation, and full audit trails, without large committees, elaborate valuation frameworks, or extra reporting.
In short: CSAs give asset managers more flexibility, better broker support, and simpler oversight, all while keeping P&L pressure off your research budget.
Conclusion
RPAs were a well-intentioned idea that never worked in practice. P&L funding is straightforward but is inherently restrictive. With both the UK and the EU now allowing research to be funded through trading commissions again, CSAs offer the strongest overall payment model. They combine transparency, flexibility, simple governance, aligned economic incentives, and efficient operations.
For asset managers who want broader research access, stronger broker relationships, and a structure that meets regulatory expectations without adding complexity, CSA is the superior choice in today’s market.
For more information on how to manage CSA’s using “best in breed” technology solutions, click here to see Castine’s suite of services for asset managers.