Section 28(e) compliance. In 2018, the European Union banned Soft Dollar payments for research, as part of Mifid II. Examples Lets assume that ABC Capital needs ongoing access to the daily closing prices of certain securities, and receives this data from XYZ Database Services, a subsidiary of XYZ Brokerage. If an outsider would pay $12,000 per year (paid in hard cash), yet ABC directs his broker to reduce his commissions that would have been charged to XYZ, then XYZ receives $12,000. "The only one who is out any real money is the broker." An example of illegal use of undisclosed soft dollars might be when a mutual fund manager pays commissions to a broker-dealer and in return the broker-dealer provides furniture for the fund adviser's use. Likewise, the adviser to a registered mutual fund cannot send brokerage to a wire-house for providing "shelf space" and marketing favoritism for the family of funds. Such brokerage arrangements, where favors are traded in exchange for institutional clients' excess commissions have been criticized by securities regulators. Full-service brokerage bundled commission arrangements involving the exchange of brokerage firms' undisclosed proprietary services provided for institutional clients' brokerage commissions (paid in excess of a fully negotiated execution-only commission rate) can create conflicts of interest. The lack of transparency in these full-service brokerage arrangements may shield abuses from immediate detection. In soft dollar arrangements, the brokerage commissions are generally higher than they would be for an "execution only" trading relationship, and over time investment performance may suffer by the higher commission cost. Because institutional funds can trade a significant number of shares every day, the soft dollars add up quickly. Over time, investment performance may deteriorate if the soft dollars are not used to purchase research that enhances performance. However, many believe that as long as full disclosure is made, clients will gravitate to managers that use an appropriate mix of soft dollar and other arrangements. In the US, although soft dollar transactions have incurred a lot of scrutiny lately, the practice is still allowed. Similar terminology In Australia, soft dollars are not illegal although they are discouraged and must be disclosed in plain language terms to clients. Many other jurisdictions also regulate soft dollars—sometime called "soft commissions," including the United Kingdom, Canada, Hong Kong, Singapore, Ireland, and France. In 1977, the New York Times used a headline Soft Dollars and Hard Economics to refer to a situation