The payment for brokerage firm services that is secured by commissions received from trades. More specifically, an investor who has a lot of trading activity might receive complimentary research services, subscriptions to market newsletters or an at-home quote system. Payment is reflected in the large commissions paid to the brokerage firm. Brokerage houses supply such free-of-charge services to investment managers in exchange for their business/commissions. Soft dollars also cover transaction costs for executing trades. Using soft dollars doesn’t contradict the manager’s fiduciary duty, provided that the money pays for research that meets the requirements of exchange regulators and supervisors and for actual transaction fees.