Investment advisers frequently take advantage of soft dollars – credits that can be used to purchase research or other services from a broker, received in exchange for trading commissions.  See “U.K. Financial Conduct Authority Clarifies Whether Hedge Fund Managers May Use Dealing Commissions to Pay for Substantive Research or Corporate Access,” Hedge Fund Law Report, Vol. 7, No. 28 (Jul. 24, 2014).  However, such practice may be in danger in the E.U.  In December 2014, the European Securities and Markets Authority (ESMA) issued its final proposals for soft dollar rules applying to E.U. investment managers that will, in most instances, prohibit a link between brokerage commissions and the purchase of investment research.  The U.K. Financial Conduct Authority (FCA) recently expressed its strong support for those provisions.  This article provides the regulatory background for the ESMA changes and summarizes the FCA’s position on those changes.