Castine Conversations: Doug Leo Interview

January 15, 2026.  Please note that this is an automated transcript of the above mentioned podcast; errors may exist. If you have any questions, please contact Castine.

Robin Hodgkins: Hello and welcome to this episode of Castine Conversations. My name is Robin Hodgkins and I’m the president of Castine. By way of introduction, Castine is the leader in providing a full continuum of research and commission management solutions worldwide. In these conversations, we meet the business leaders in commission management and research as they’re managed, reported on, and paid for worldwide.

In this conversation, I’m chatting with Doug Leo, the head of Commission Management at Raymond James. Doug and I have known each other for quite a long time, and I’ve really been looking forward to this conversation. We’ll be talking about research invoicing from the broker’s perspective, and also Doug’s observations on commission management as it stands currently in the United States and new developments in the United Kingdom. I hope you enjoy this conversation.

Doug, thank you very much for joining me today. I really appreciate your taking time to meet with me.

Doug Leo: Thanks for having me, Robin. It’s always a pleasure.

Robin Hodgkins: Well, it’s funny—we’ve known each other for a long time and I really don’t know much about your background. I know you’ve been to some very illustrious schools like Wharton and the Stern School, but I don’t really know what led to even those decisions, what got you into a finance direction when you were a high schooler or thereabouts.

Doug Leo: Yeah, well, it started really in high school because we had an organization—I don’t know if you’re familiar with it—called Future Business Leaders of America, FBLA. I got involved with that. My high school did not offer any finance or accounting type courses, but I was always interested in the financial world. Through that club I was able to learn about those disciplines in addition to normal high school classes. They offered things like projects, working with teams, and interview skills.

I ended up going down the road of really enjoying finance, business, law, accounting, and some leadership disciplines. That organization’s pretty cool. It led to local, state, and national competitions where you would compete to earn some credibility amongst peers. I’m not going to tell you the year, but way back—way, way back—I was Mr. Future Business Leader of America of New York State. Pretty proud of that. I finished somewhere in the top spots for nationals. That was a lot of fun. And that kind of got me focused on trying to get an undergraduate degree in a business school.

Back then it was a little bit less about—if you had a liberal arts background, you were incredibly valuable, just as valuable as a finance background. But back when I was in high school, to get a job in finance, you needed to have a finance degree or at least a related business degree. I focused on that. I was very fortunate to get into the University of Pennsylvania. I don’t think I could get into that institution today—it’s much harder than it was. I think they must not have been paying attention that day. Somehow they let me in, and I spent a lot of time there. It was really enjoyable. I was able to take all sorts of different classes. I focused on finance and marketing, double major with a little bit of history on the side.

After that stint, I worked for a few years at a couple of corporations and banks out of training programs. And then I was taking my MBA at night at the Stern School of Business at NYU. In order to finish that, I was fortunate enough to get into a study abroad program in Manchester, England.  I went to Manchester Business School for a semester and decided to knock off the rest of my MBA full time. I took a leave of absence from my job and completed that. After starting at Drexel Burnham Lambert back in the day, I ended up at Lehman Brothers doing financial analytics actually for management.

That was great. It was a lot of fun. I got to move around between fixed income and equities. When the leadership team moved over from fixed income to equities, I followed them. I really enjoyed my time there. I think in the middle of that stint, a few years in, there was a department that I was doing some analytics for called the Soft Dollar Department—it wasn’t called Commission Management back then. They had an exodus of people that are actually still in the industry, some of them, who ended up going to a different firm. So they tapped me on the shoulder and said, “How would you like to learn about and sell and help on the soft dollar effort at Lehman Brothers?”

Robin Hodgkins: And that was at Lehman Brothers?

Doug Leo: Yes. Great. Well, I mean, just going back to your comment about the program you were in in high school, I really think it’s remarkable how there are some schools out there that really have programs like that and really encourage people to start a life track as you’ve been able to do. And I know you’ve always been a leader in the industry. I’ve never realized that you are an award-winning leader in the industry. I’m even more delighted to know you.

Robin Hodgkins: I think getting involved at a young age in either a financial—Future Business Leaders of America, DECA is another popular one for marketing—there are all sorts of great institutional nationwide type organizations that help high schoolers figure out where they want to go. So this worked for me and kind of got me on the path to look for a job in finance. I know it’s difficult these days, but I think the good news is a lot of companies are not just looking for finance majors—they’re now looking for anybody that has accomplishments. I told my kids, and I think every child, every student should be looking for a way to kind of set themselves apart as a leader or as an involved participant in any organization of really anything that drives and motivates you.  I think that’s an important part of who I am.

I was also—just kind of a goofy thing—but when I was at Penn, I spent four years on a radio show. So I DJ’d back in the day. This is how old I am—back in the day, actual vinyl to spin around. It was so enjoyable and that kind of got me out of my shell as well to, in addition to the competitions, really enjoy and be able to talk to people, to an audience.

Robin Hodgkins: Definitely, definitely. And commission management, as you said, soft dollars—and we both date ourselves going back to soft dollars—but it really is a relationship game. You really have to be able to know how to talk to people. You need to understand what their needs are. You need to understand how your services can help them. So kudos to your DJ experience helping you with that.

Doug Leo: Yeah, I think it helped. And I think a lot of younger folks have it tough. We had the COVID era, whether you were impacted by that in high school, college, or professionally. People working from home, which is a great thing—it’s hard though to have those social interactions and be able to talk to people face to face and be able to understand what people need from a business perspective and what we need to deliver. So I think just anything you can do to kind of get in front of folks and talk to them and just listen. It’s not just about what I have to say. It’s really about what they need and what they have to say. I think listening is kind of a lost art these days. I try my best.

Robin Hodgkins: You’re very successful at it indeed. You listened and grew within Lehman Brothers. Of course, we know what happened to Lehman Brothers. And then I guess you went through a transition or two and you wound up at Raymond James, still doing—now doing commission management, not doing soft dollars. Is that right?

Doug Leo: Yes, we’ve changed the name to make it sexier, I suppose. But I was at Lehman for 15 years and left before they went bankrupt. At that point in time, I was fortunate enough to land with a small boutique firm out of San Francisco called Thomas Weisel, which was specializing in tech on the equity side. They needed someone to drive their—to start their commission management effort. And I needed a job.

I went there and built the commission management business from zero clients to many clients. I worked closely with the head of electronic sales there, so I learned a little bit about electronics and they learned a little bit about commission management. It was a great firm, small, but had a pretty wide reach as far as clients.  I was able to build a business there from scratch. I’ll give you a free plug—I got to meet you before that time. But then while I was at Thomas Weisel, I think your former company and iteration, Cogent, was able to help us with a software solution that allowed me to kind of automate and build the business there from scratch. I had started out with just myself, so automation was key there.  I appreciate all that help and grew that business for a couple of years.

Unfortunately—or fortunately, I’d say fortunately at this point—Thomas Weisel got bought out by Stifel and management there decided they wanted to go a different direction and do things via spreadsheet. I don’t know what happened there, what they’re doing now, but it actually worked out pretty well because I had an opportunity at Raymond James to start again and build a commission management business. So once again, I went to the new iteration of your firm, which we love, called Castine, as everybody on the podcast knows. And we started, continued our partnership under the new logo and regime with the same great kind of hands-on, customized building that you guys have been—I’ve been fortunate enough to work with you. Castine has provided for us, so we established that business with zero clients. We’re at hundreds of clients now, 15 years in. We built the business from scratch. So that’s been a lot of fun. It’s really exciting and interesting because you kind of get the gamut of everything from systems to operations, to treasury function, to tech, technology, compliance, legal, and it’s pretty global. So yeah, it’s a lot of fun.

Robin Hodgkins: Yeah. Well, thank you for the plug. I appreciate that. And I know I’ve learned a lot from you over the years and I really appreciate all of the insights you’ve given me. You know, one of the things I guess you really have to make a decision about when you talk about commission management is whether it’s something you’re going to do as an accommodation, kind of as an afterthought, or something that you want to use to grow your business. And I think in your experience it’s always been the latter, which is a way to grow the business. Is that correct?

Doug Leo: Yeah, I mean, it’s an interesting animal because I don’t know, for the folks that are listening, whether or not they know about commission management—business typically happens at a haircut. So what that means is that if a client would normally trade with us at four cents a share, three cents a share, to do the commission management business, you are accepting less than the full rate, which is really a bundled rate that includes both the trading commission component and the research commission component.

A lot of folks either don’t understand it or don’t know why a business would want to do that because effectively you’re getting business on the margin, which is—when you’re doing commission management, you’re effectively keeping the trading commission and you’re giving up the research commission to a pool of money which would be used by the client at a later date.

So, you know, just giving you a quick story—at Lehman Brothers, we were seeking that business. We were going after the business. Some folks in the business said we don’t want it, or we’ll only give it to our biggest clients that are already paying us millions of dollars as an accommodation, as you mentioned. But the biggest players in the industry—I don’t want to mention any names, but their initials start with G or M—and they were not a fan of this business. They didn’t want to do the business. They wanted to get their six cents a share via kind of saying to folks, “Look, you need to trade with us if you want to get access to our deals.”

And what was cool about Lehman Brothers—it’s pretty entrepreneurial—and they allowed us to go after this business, which was really left as a void for the rest of the bulge bracket at the time. We grabbed hundreds of millions of dollars worth of unwanted lower margin business, which, you know, we became the market leader in commission management where some of these other firms didn’t want it and thought it wasn’t a good business because it wasn’t at the full margin.

We started that business, and to answer your question, we came over to Raymond James, a smaller—well, more regional firm. I mean, we are in the top 15, maybe not in the top five or seven as far as size. But to compete properly, you need to have access to all trading products and all ancillary products that make sense. And I think commission management becomes a key component here because when clients trade, they want the ability to trade bundled if they choose that. They want the ability to trade unbundled. They want to have the flexibility to trade as much as they want if they like our trading product. Commission management allows that because before we had commission management, clients would just trade to a number and then once they hit their research budget, they would stop trading.

We recognized this at Lehman and we recognized this at Raymond James, where, hey, we would like a client—if they like our algorithmic solution or their program trading solution or options or over-the-desk business—to have the ability to trade an unlimited amount based on how they like our trading personnel or systems. And then anything in excess wouldn’t be going to waste. It would go into a pot or a pool of money to be used for paying for research. So that’s been an incredible boon for Raymond James. It was an incredible boon at Lehman Brothers. And we look at the business as a valued partnership with our clients and not, you know, kind of, “Hey, it’s a low margin business, let’s not do this.” We’ve embraced it. It’s grown tremendously and it grew tremendously at Lehman Brothers and it grew tremendously here at Raymond James. I’m very excited about being able to offer that for clients.

Robin Hodgkins: And I think you really hit the nail on the head about the whole benefit of unbundling. I mean, you have the separation of church and state, or in other words, execution and research. So rather than trade to a cap, you now have the ability based on best execution to trade an unlimited amount, which benefits the client, benefits you, benefits the whole operation. It really has been a win-win for Raymond James and a lot of other firms that have recognized that as a step back.

Doug Leo: A hundred percent. Yeah, a hundred percent. And I think, you know, the traditional business when I started way back was just what we called soft dollars, we talked about before. And the premise of the business is when Congress deregulated commissions in 1975, the famous Section 28(e) came into place where it allowed clients to unbundle commissions and use a portion of those commissions above the lowest possible trading price to access things that benefit the client or their client, the end client. So things like technology, expenses that were relevant, independent research—some market data in the US was allowed and is allowed. So that is an incredible value for clients that want to be able to provide the best—have the best technology, the best access to trading.

And then what kind of transpired in the middle of my stay at Lehman Brothers was clients came to us and said, “Look, we love trading with you. We have 150 trading counterparties. Not all of them do the same type of quality job. There’s a best execution focus. What do we do?” We came up with the idea of CSA or commission sharing arrangement. And we did that with a few partners to start, which shall remain nameless. But we started out with them and it was a need.

And what they effectively wanted to do was trade with us and maybe a few other larger counterparties and be able to write checks to the rest of their research universe. Maybe they didn’t really have a viable execution desk or it wasn’t big enough or didn’t do the type of executions the way we could do them. We started out doing that. And that business has now outpaced and outgrown over the last 20 years the traditional soft dollar business.

Commission sharing arrangements and what we now call commission management as the umbrella is huge. It’s globalized, it’s exciting because it allows—you know, the biggest complaint we had over time is a portfolio manager would come to a head trader and effectively say, “I ran into somebody, I want their research,” and the trader’s response would be, “I know their trading desk. They’re terrible. We have no accounts opened up for them. What are we going to do?” The portfolio manager would say, “That’s your problem.” And the problem there is it does fly against the heel—either the qualification or the requirement of best execution.

The CSA sort of solved for that. It allowed head traders to trade where they wanted to trade, when they wanted to trade, with whom they wanted to trade with. And it allowed portfolio managers to consume research at will across a slate of brokers or independent providers without regard to what the trading decision was going to be. And that has been a humongous transformation in the industry. And so we kind of took that when Lehman went under—we took that concept and kind of broadened it out to the rest of the street. Now, anecdotally, you know, we’ve heard quoted all over the place—I’m sure you’ve heard this at all the panels that you speak on—but I think it’s 80% of the money managers globally use commission sharing arrangements or some form of commission management. So it’s widely utilized, widely accepted, and I think it allows both the research—our clients’ research departments and trading departments—to get where they want to get to. And that’s kind of where we’re at now.

Robin Hodgkins: Yeah. And I think you’re absolutely right. The percentage use of commission management is huge. It’s, you know, closing in on 100%. And I think it explains why—I don’t think a day or an hour goes by where we’re not having conversations with people about expanding their commission management offering, or for brokers that want to start offering commission management to their clients.

But you mentioned transformational aspects of the commission management business. In your own world, you’ve had some transformations as well, and one of them more recently is—you are, I believe, taking over the research invoicing component of the business, which is obviously directly related or can be directly related to soft dollars and commission management, because that’s used to pay for research. But how did it come to be that you took over that invoicing side? Was that something you’d had for a long time or was it something that was given to you more recently?

Doug Leo: I think it was new for me coming into Raymond James because at Lehman Brothers we did not take inbound checks. We were happy to trade as much as possible, but basically said you need to trade with us if you’d like our research. Sort of unfair. If a client wanted to trade away and write us a check, we would not take it. But at Raymond James, it’s a little bit different magnitude, a little bit different approach. We want clients to pay us any way they want to pay us. We prefer trading—that would be the best—but if that isn’t going to happen, we would take an inbound check. So that was part of the start of taking checks.

We also find that our best clients effectively do both. A good example would be a client trading with us without regard to what the research vote is, which is what typically happens. And at the end of the quarter, anything above the trading execution cost would go to a pool of money, sometimes at Raymond James, sometimes at an aggregator. And at the end of the quarter when the vote comes in, we would likely get a check back for a vote score, which would be in line with the vote and in line with what we deserved.

You know, if there was a particular quarter we didn’t provide any research, which doesn’t really happen, but if it did, we would be deserving a zero, but we’d still be able to trade with that client all quarter long and then take a check from that client’s pool of money, whether it be from the wallet that they keep at Raymond James or the wallet that they keep at another provider.

By definition and by force, we needed to be able to take inbound checks, and doing it on a spreadsheet just wasn’t cutting it. So another plug for you—we came to you guys and said, please help. Fortunately, you guys have a product called Spinnaker, which does a lot of things, but for what we use it for, it allows us to automate inbound payments.

So the way that would effectively work is we get a notice from a client or from the client’s aggregator asking us to invoice based on our research results for the first quarter of 2025, let’s say. We would send out the invoice via the Spinnaker system, which is all electronic, all automated, all auditable, and that would go out immediately. And then, as you know, when the payments come in, we have a catcher’s mitt for all the inbound payments, which is sort of a treasury function, and we compare those inbound payments to what’s on Spinnaker and are able to match those off, show when they were paid, and then attribute the funds to the appropriate folks at Raymond James that deserved that payment. And that’s been a godsend for us, because when I first came in, it was spreadsheet and pray, and now it is all automated. So I thank you for that.

Robin Hodgkins: Well, thank you. I appreciate that. And I think you answered my next question, which was—I like the line “spreadsheet and pray.” So it literally was a spreadsheet-based operation before you automated it.

Doug Leo: Yeah, when we started, it really wasn’t organized. And by force, I mean there’s an organization we work with called McLagan that tracks not only trading commissions but also inbound payments called investment advisory payments. And as the business got built, I think Raymond James was ranked seventh. I think we’re now in the top 10 or 12 for inbound checks as well. So that, as I said before, goes on the heels of doing a complete partnership with a client, taking in their trades, unbundling them, and then getting those back in the form of an inbound payment.

So as that went from 1, 2, 3, 5, 10 clients, we probably now have about 300 to 400 clients that are sending us inbound payments. Fortunately, a lot of those are trading with us as well, so that’s the perfect partnership for us. But for those that say, “I’m sorry, I’m only going to be trading internationally,” or “I only want to trade with these five prime brokers,” we have the ability to take an inbound check via the system and attribute that and match it off. It makes our sales team and our research team very happy because they can realize for their efforts the payments that are earmarked for Raymond James for their efforts. It’s been very helpful. And a spreadsheet solution can only go as far as your capacity to keep a spreadsheet. So at some point in time when you get past a few dozen, you’re going to need a solution, whether it’s Castine or another solution. I think it’s important to automate that function in order to survive with a small staff.

Robin Hodgkins: Yeah, I think there’s some rule of thumb about—I think any spreadsheet with more than like 90 different cells and 90 different calculations has almost a 100% chance of having an error in it. And I’m not quoting the actual research, but it is an operational risk, and losing one research payment because it wasn’t put on a spreadsheet the right way very likely could have a lot of downstream impacts to the operation and to one’s livelihood, I would imagine. So I appreciate we’ve been able to help on that front.

But speaking of the invoicing side of things, we have clients that use Spinnaker for different purposes. Are you using it just for the invoices that are requested by clients, or do you do other types of invoicing off of the Spinnaker product?

Doug Leo: We use it specifically for inbound research payments, but that said, we make an important distinction between CSA payments. There’s also a kind of niche business called Alpha Capture, so that’s a separate invoicing process and attribution. There’s also the direct payment, hard dollar—hopefully we’ll get into a little MiFID discussion later—or the wrap MiFID. So there’s hard dollars, there’s commission sharing arrangement payments, and there’s Alpha Capture payments, direct payments. So those all get distinguished within the Spinnaker system because each invoice is required to be phrased differently because there’s different regulations, at least for Raymond James, around how we can document and get an inbound payment via an invoice.

We actually have your team help customize templates for us so that we can not only show the period, the amount, the client, and the bank details, but also the type of payment that we should be expecting. Who should we be expecting it from? Is it directly from the client? Because for us that has regulatory impact. Or is it through a third-party CSA provider?

Robin Hodgkins: Excellent, excellent. And I think people understand that research and invoicing for research is kind of the lifeblood of a firm like Raymond James, like most firms, but I don’t know if they really understand—just stepping back a little bit, looking at how this works—what the impact of invoicing is downstream. What is, how does it work with compensation or business planning or aligning resources with clients? A lot of people just think, well, you do research, you get paid for it, and then that’s it. But that is definitely not the end of the equation, right?

Doug Leo: 100%. I mean,  most of our clients are on vote systems. I know you guys have an offering and others do, and we have to be able to—my research team, my sales team is very active in reconciling those votes and those interactions. Once those interactions are logged and reconciled, we put an internal value on that. Clients put a value on that themselves, which leads to their vote and their vote system. And then we have an internal measuring system that conglomerates all those interactions and meetings and conferences into what we would hope to be our number, and the client does the same. Hopefully that number is within the ballpark, and that’s how we then invoice. It’s always based on the client’s valuation of what our research is.

But yes, at that point, once the inbound payment comes in, there is an attribution side of things. It’s kind of a true-up between, okay, here’s the money, who did the work internally, and then which team, which client does that get posted under? So we recognize the fact that that client has paid us for the research services rendered. And making sure that we are diligent about collecting—most clients pay quarterly, some pay semiannually or annually. There are a few that don’t pay and we’ve got to chase those—different conversation, right?

But generally clients are excellent and realize on their side too, they need a solution. And oftentimes it goes beyond a spreadsheet where they’re using yourselves or others to track interactions and track votes and payments. So that is a big part of what we do. We’re fortunate enough to have two modules that we use integrated from you guys. One is Commander, which allows us to do the trading relationship side, which is kicking in the trades and splitting those out and tracking that and creating a wallet for our clients. And then the other side of it, as you mentioned, via Spinnaker, is now generating invoices and receiving those monies. I mean, there are clients that have us pay ourselves out of those wallets. So they’ll ask—so we’ll use one side of your system to track the credits and then the other side of the system to generate an invoice to be able to, whether it be pay ourselves or receive payment from a third party.

Robin Hodgkins: And it is nice when both sides can talk to each other. So that’s a nice benefit.

Well, that’s really been very fascinating. I think it’s kind of an eye-opener to the world about how the invoicing impact does flow downstream. And it’s not just ending with the actual payment—there’s the attribution piece as well, which I didn’t know about before we started in this side of the business years ago.

But with your perspective of invoicing and research and commission management, what do you see coming down the pike? Maybe first on the invoicing side, are you seeing new things being asked for around electronic billing or other things? And we’ll switch over to MiFID II and CSAs in the UK.

Doug Leo: Yeah, again, I think it’s important to have a scheduler. We have worked with you guys to create a scheduler so we can, for some of our smaller clients or clients that don’t necessarily remember to pay us, they say, “Hey, could you send us a bill every month for $2,000?” We have a schedule that will create an invoice and if we want, mail it out directly to a client so that we don’t have to think about it and the client doesn’t have to think about it. So that’s a nice feature. Thank you.

But beyond that, it’s also, again, who’s paying us? How are they paying us? What wording do we need? So that’s very important to Raymond James from a compliance perspective and just in general. I think having the invoices automated, tracked, proper bank instructions on there, PDFs, the whole nine yards—it makes it more formal. Obviously nobody’s using snail mail these days. Everybody’s using email. And just the ability to communicate with a client on an automated basis is, I think, what’s coming down the pike.

Clients also pay out different pools of money sometimes. So we have the whole onset of MiFID in 2018, which had clients then, especially global clients, come up with an issue around what do we do now that UK and Europe can no longer pay out of third-party CSA funds, commission sharing funds? How can they fulfill their research obligation? So back in 2018, we spent a lot of time with the regulation researching and coming up with ring-fencing solutions that would allow large global clients to write us checks from their CSA funds for the US and outside of Europe—Asia, Australia, et cetera. But for Europe and the UK, we would have to take direct payments. That is a whole discussion for another podcast. But I would say that was a huge challenge for us in the last seven years. And again, very helpful to have an automated solution. But yeah, over the time we’ve had to bifurcate the expected payments coming in, some coming from Europe, some coming from the UK, some coming from the US. And quite frankly, on a global payment, you’re now going to get X amount of dollars in the door in two or three different methods, different sources. That’s hard to track. That’s why it’s important to be automated and not try to do this with a flashlight and a spreadsheet.

Robin Hodgkins: Yes, and I think we all lived through the good days of MiFID II and did a lot of work around that. A lot of things have now been changed with the new FCA guidance on payment optionality. What are your thoughts jumping over, jumping across the pond to what’s happening in the United Kingdom? And when do you expect that people are going to start actually trading CSAs once again over there?

Doug Leo: Well, it should have been happening already. I think that I don’t quite understand it. I know that a lot of UK firms that are permissioned to do so are thinking about it. I’ve had discussions with, I want to say, many dozens, if not a hundred or more clients about next steps. I think the buy side is on a pause. I think there’s some fear to be the first to switch from P&L payment back to using client commission dollars for research payment, and that is expected a little bit. But I think clients are really looking to who’s going to be first. They’re looking to global firms to say, okay, is one of the top nine global firms going to start paying with their client wallets?

Which is a little bit crazy because at the end of the day, over the time of MiFID there have been some benefits. To be able to do a research review budget, make sure that the valuation of what you’re paying for equals what you’re getting, making sure you’re not paying folks for relationships, that you’re paying folks for actual research—some of those MiFID tenets are still in place and make sense and still make sense. The biggest part that didn’t make as much sense, which I think was a little misguided, was not using client commission dollars to pay for research. Because the ultimate beneficiary of research are, yes, our clients, but also our clients’ clients, the source of funds. So whether that be pension funds or individuals or corporations or separately managed accounts, the idea there is to obviously get alpha, to be able to get performance out of your money managers. And in order to do that, you need access to research.

And I think what happened with MiFID, the kind of unintended consequence was many firms decided, “Well, I have to pay out of my budget now, so my own P&L. So how about we just cut research?” The unfortunate consequence was many smaller research providers are out of business. Many smaller brokers, many smaller clients because they didn’t get enough alpha, couldn’t perform and kind of got merged out or lost their assets.

The good news is the FCA finally figured this out, and we are now at the point where the research costs can be shifted back to our clients’ clients. It may seem like it’s a major discussion and decision, but since the cost of research is such a small part—I don’t have all the studies in front of me, but anecdotally, you and I have both heard that it’s one basis point—the cost for research versus all the alpha that all this independent research and broker research gives, to be able to have our clients beef their budget back up in a measured way, in a reviewed way, the way MiFID wanted, but now using client commission dollars only makes sense.

And I think we’re hopeful that this will start in 2026. Again, I think clients are going to take their time. They don’t want to be first. They don’t want the Bloomberg headline that client A has decided to use client commission dollars. But what really hurts is it’s hurting our clients because they’ve had to take money out of their P&L, and for—it’s kind of a vicious cycle. They use less research, they get less alpha because of that, which means they lose more assets, which means their clients suffer.

I strongly believe that when this gets opened up again and the dollars shift back to the client—and you don’t need permission from the clients per the FCA, just need to disclose this. Obviously, any of our clients that have large clients are going to not only disclose it but have pointed conversations. But when you look at the actual research cost versus the benefit of the extra alpha, it’s really a no-brainer. I think a lot of our clients in the small and mid-cap range would be the ones to benefit the most right away because of the P&L impact and just the access to research. I think as that number grows, the delivery of research and the alpha generated is going to be immense and very beneficial to the whole community.

Robin Hodgkins: I totally agree. And I also was in the camp of expecting people to start using CSAs in the UK back in July. Maybe, certainly by now there’d be a lot of groundswell. That said, we work with a lot of brokers, a lot of asset managers, and we’re seeing the same thing. A lot of people are lining up their paperwork, lining up their systems, their procedures. A lot of training has to happen as well. People have to understand what this is and why it’s good. I mean, you make a tremendous point about improving the research availability, having that to help with performance. It’s all about performance at the end of the day, and more research, I think in almost everyone’s mind, leads to more performance. It has to happen. It gives you a much better picture of what’s going on.

What are your thoughts about what’s next? Europe is—I guess we’re staring down the calendar at Europe next summer. We expect some things to come out of the other side of the English Channel. What are your thoughts there?

Doug Leo: Yeah, I think that is coming. To your point, I think the rest of Europe will soon adopt what the FCA has done, which is to allow the use of client commission dollars again to provide research. And we’ve seen it in Europe. We have large partnerships in Europe, and again, a lot of those folks are getting less research just because of the impact to P&L.  I think once the summer comes and now it will be back to pre-MiFID days, as far as the ability to use client commission dollars globally, it will allow our global clients to go back to a fully CSA-funded—our clients’ clients funded—method for paying for research. And that I think will give the smaller and midsize or kind of slow-moving clients a way to hang their hat on. Well, look, now the big global folks are doing it, so we should do this not only in the UK but also Europe and globally. And again, the ones that will benefit most are the ones that need it the most. So hopefully that will come quickly.

I think it’s a relief because I think back when MiFID started, there was a lot of talk and thought that everyone was going to go to P&L, and the FCA thought that, and I think they got that one wrong. They got a few things right in their controls and their oversight process. So to your point earlier, I mean there was a large amount of time spent on understanding MiFID and there are a lot of procedures in place and people in place to make sure that function’s working. And you’ve got to sort of unwind that and find an automated solution that will be compliant, that people understand that they can start using. And I think just as it took years to get to MiFID for UK and European clients, it’s going to take hopefully less than years, but a year or two to get clients to go back to the way it should be, which is global use of client commission dollars.

I am hoping and expecting that thought leaders, and I guess fearless clients, will just do this because it’s the right thing to do and not worry about being the first or the second or the third. We’re hoping that comes down the pike in 2026. Clients are already bringing this discussion to their exec boards, to their largest clients and getting some positive responses, and now it’s just a matter of getting their systems and procedures and compliance in place to do this, which is actually a lot easier than trying to comply with the MiFID rules as they were. We’re excited about the opportunity. It allows me to talk to many of our European clients that we really weren’t allowed to talk to during MiFID times because they were not able to use commission sharing arrangements. So certainly excited to hear at Raymond James for that opportunity, because we do have hundreds of European clients that had to bifurcate the business in that regard.

Robin Hodgkins: Great. Wonderful. Well, Doug, I really appreciate your insights on the research invoicing side, on the commission management side, on the UK side. Now I know why you won that award in high school, so definitely bringing it back full circle. But thank you again so much for your time and I look forward to seeing how things roll out in 2026.

Doug Leo: All right, Robin. Well, happy holidays and thanks for letting me have a chance to speak.

Robin Hodgkins: Great. Thanks very much. Take care.

I’d like to thank Doug for joining me today. It’s been a great conversation. For more information on Raymond James, please visit raymondjames.com. For more information on Castine and our full continuum of research, commission management, and other services, please visit CastineLLC.com. Thank you very much.

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