The following guest article was written by Bob Nowicki, President at Westbay Global Consultants, a consultant in client strategy/profitability and commission management with more than twenty years of experience managing the global commission management divisions of major Wall Street firms.
Commission management was once a vital engine of sell-side brokerage revenue and client engagement. Today, it’s a shell of its former self, siloed, mismanaged, and in many cases, forgotten. The fall wasn’t inevitable. It was the result of missteps, misunderstandings, and a dangerous erosion of institutional knowledge. The good news? The solution isn’t complicated, but it does require will, leadership, and a return to first principles.
Let’s walk through what happened and how brokers can reclaim this lost art.
When Soft Dollars Were Smart Dollars
It started with an opportunity. When Congress abolished fixed commission rates in 1975, it introduced Section 28(e) of the Securities Exchange Act, giving money managers the legal footing to pay above the lowest commission rate if they received legitimate research or brokerage services in return.
Thus, the “soft dollar” era began. Broker-dealers jumped on the opportunity, building desks specifically for commission management. These weren’t back-office accommodations; they were strategic growth engines: volume acquisition, relationship development, and revenue generators.
Commission management wasn’t a cost; it was a competitive advantage.
The CSA Boom
The SEC’s revised guidance in 2006 further legitimized Commission Sharing Arrangements (CSAs). Broker-dealers could now clearly separate execution from research payments, unlocking new flexibility for asset managers and a powerful tool for brokers.
The result? CSAs exploded. These teams weren’t just middlemen, they were client partners, advisors, and problem-solvers. Commission management became a critical touchpoint and a trusted cross-selling channel. When done right, it didn’t just bring volume and revenue, it brought mindshare.
The Fall: Aggregators, Apathy, and Avoidable Mistakes
So what happened?
The short version: we gave it away.
Asset managers outsourced the relationship to aggregators.
Brokers gave up control to cut costs, often by moving the business out of trading.
Operations took over, and sales disappeared.
Documentation slipped. Metrics vanished. Communication broke down.
The end result? Most clients today couldn’t tell you who their CSA broker is, only who their aggregator is. And many brokers couldn’t tell you who their client contact is, only who they call when a trade breaks.
This is not a viable business strategy. It’s abdication.
The Fatal Myths Killing the CSA Business
Let’s be blunt. Some widespread beliefs in the industry are flat-out wrong, and dangerously so:
“It’s a client accommodation.” No. It’s a relationship-building, volume-generating business when you treat it like one.
“It sells itself.” No. You need a sales effort. Many clients say, “They never even asked for our CSA business.”
“It’s just Ops work.” No. This is high-touch, relationship-driven, revenue-sensitive business. Not box-checking.
“Payaway is just lost revenue.” No. It’s the most misunderstood and abused concept in the CSA ecosystem.
“We’ll just take a check.” No. That removes you from the trading relationship, and it’s the fastest way to lose mindshare and flow. You do not grow your broker-dealer that way.
How to Win and Reclaim the Business
Want to be a CSA winner? Here’s how:
1. Put the business back in trading.
The desk understands how to generate revenue and drive volume. Operations does not.
2. Hire the right people. You don’t need many, but they must understand clients, relationships, and how to sell the commission management business.
3. Invest in real infrastructure.
Spreadsheets don’t scale. Internal builds decay. Buy a proven system and use it to generate real-time metrics, client value reports, and insights.
4. Track the value and show it.
If you’re not measuring it, you can’t manage it. Prove the business case with data.
5. Sell the business.
Clients have options. If you don’t ask for the business, it often falls to the bulge bracket investment banks by default.
6. Own the relationship.
You, not your aggregator, should know the client’s goals, structure, and pain points. Be in regular contact. Be a problem solver. Be indispensable.
UK/Europe: Your CSA Renaissance Is Coming
For UK/European firms, especially small to midsize asset managers, CSAs are coming back. But if you’re not already implementing your system and teams now, you’ll be left behind.
Most clients will start with 3–5 CSA brokers. If you’re not on that list from day one, you’ve missed the best chance to gain incremental flow in years.
Lastly, as CSAs return in the UK and Europe, will U.S. asset managers look to find one or two overseas brokers to open programs with? Will you watch your competitors take that business?
The Way Forward
Commission management didn’t fail. We failed it. By moving it out of trading. By treating it as Ops. By ceding the client relationship to aggregators. By failing to invest in people and systems. By pretending it wasn’t worth the effort.
But here’s the truth: the brokers who treat commission management as a serious, strategic business will win. They’ll gain volume. They’ll gain revenue. They’ll build mindshare. They’ll become an essential component again.
The art isn’t lost, it’s just waiting to be found again.
Who is ready to bring it back?
Author’s Bio
Bob Nowicki is President of WestBay Global Consultants, Inc., working with the sell-side, buy-side, fintech, and other consulting firms in client strategy/profitability, commission management, trading, and operations. He has almost two decades of experience leading commission management programs at Bank of America Merrill Lynch and Evercore ISI. Before that, Bob was Principal of a fixed income arbitrage hedge fund, Polaris Asset Management. He has experience trading fixed income, equities, futures, options, and derivatives, as well as experience in middle office and operations at firms such as JP Morgan, Credit Commercial de France, and Bayerische Landesbank. Bob received his B.S. in Finance from St. John’s University.