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We offer registered professional advisors and hedge and mutual funds the flexibility to offset the costs of purchasing approved research products and services using soft dollars. Soft dollars are brokerage commissions that are used to purchase research products and services from vendors. You can set up soft dollar payments in five tiers for stocks and for options.
Contact us to set up soft dollar vendors and to disburse accumulated soft dollars to vendors by sending an email to firstname.lastname@example.org.
You can access this page if you are a(n):
The first time you access the Soft Dollars feature in Account Management, only the Request Soft Dollars link appears in the Manage Account > Settings > Fees menu.
The Soft Dollars page lets you set up a five-tiered schedule for soft dollars. Markups must be between 0 and 0.05 dollars per share for stocks. At the time of your trade, you specify which soft dollar tier to use; the soft dollar amount will be based on the tier you select. Currently, only US stocks and options are eligible for soft dollars.
The Soft Dollars page only appears AFTER you have signed and submitted the Soft Dollars Agreement on the Request Soft Dollars page.
To set up soft dollar tiers
The Soft Dollars page shows the current and last soft dollar commission schedules for stocks and options. There are five tiers of soft dollar commissions for stocks and for options. The first time you use soft dollars in Account Management, these fields are set to 0 (zero).
The dollar amounts for the five tiers must be in ascending order, with the lowest amount in Tier 1 and the highest amount in Tier 5. If you enter soft dollar amounts in non-ascending order, the system automatically rearranges the amounts in ascending order for you.
Please note that this tier selection is used to calculate the total gross commissions, and the soft dollar disbursement amount is the remainder once all commissions have been deducted. Let's look at a simple example on a stock order using the Fixed Rate commission structure. Suppose you set a soft dollar Tier 5 for stocks to 0.05. In IB TWS, on a stock order for 1000 shares with Tier 5 selected, total client commissions would be 1000 shares x 0.05 (Tier Rate) = $50.00. The Fixed Rate commission on this order of $.005/share is 1000 x .005 = $5.00. The soft dollar amount would be equal to $45.00 for this order.
If you have set up and are using soft dollars, your activity statements will show all of your soft dollar payments in the Soft Dollar Activity section of your statement. You can also choose to include or omit this section when you create customized activity statements and Activity Flex queries.
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