Which of the following is NOT a type of Soft Dollar arrangement?

Soft Dollar arrangements refer to the practice wherein an investment adviser uses client commissions to pay for research and other services, as long as those services benefit the client.

Third-party research, proprietary research, and commission sharing arrangements are all recognized as forms of Soft Dollar arrangements because they involve using commissions to procure research or services that enhance the adviser’s ability to manage client portfolios effectively.

Third-party research emanates from external sources and is paid for through commissions on transactions. Proprietary research is produced by firms or service providers the adviser collaborates with, also funded through commissions. In commission sharing arrangements, an adviser may share commissions with another firm in exchange for access to research, contributing to the overall benefits provided to clients.

On the other hand, direct commission rebates do not fall under Soft Dollar arrangements. This is because rebates involve returning a portion of the commissions directly to clients, rather than using those commissions to acquire research or services that would benefit the client indirectly. Thus, direct commission rebates are fundamentally different in purpose and function from the Soft Dollar arrangements mentioned, which aim to enhance research capabilities and investment decision-making.