The Canadian Securities Administrators have published a new proposal for regulating the use of so-called “soft dollars” for a 90-day comment period.

A previous version of the rule has been materially revised in response to comments, the CSA notes. The purpose of the proposed rule remains the same, but the content has changed.

“The proposed instrument continues to provide a specific framework for the use of client brokerage commissions by advisers. It clarifies the broad characteristics of the goods and services that may be acquired by advisers with these commissions and also describes the advisers’ disclosure obligations in relation to such use of client brokerage commissions,” it notes.

It also gives additional guidance regarding the types of goods and services that may be obtained by advisers with client brokerage commissions, as well as non-permitted goods and services, and it provides guidance on the disclosure that would be considered acceptable.

In an accompanying cost-benefit analysis, the CSA indicates that updating the current requirements decreases uncertainty for dealers and advisers and improves their clients’ ability to monitor the use of their brokerage commissions. It expects dealers and advisers to incur a one-time cost of approximately $3 million, or $2,800 per firm, when reviewing their current brokerage commission practices and arrangements. The additional costs of providing more detailed disclosure to clients are not expected to be significant, it adds.

However, it also notes that the BC Securities Commission still hasn’t decided whether to adopt the rule or not.

The common themes that emerged from the comments received on the previous version of the rule were: difficulties could arise regarding the application of the rule to principal transactions in securities where there is no independent pricing mechanism; the requirements should be harmonized to the greatest extent possible with those in the U.K. and U.S., with preference for harmonization with the U.S.; the proposed disclosure requirements would be difficult to meet and may not be useful to many clients; and, a transition period should be considered.

Regulators made substantive changes in several areas: application of the proposed rule; the definitions of order execution services and research services; the framework for client brokerage commission practices; disclosure of client brokerage commission practices; and, a transition period.

It is now out for comment until April 10.