They think buy-side companies should pay expenses on their profits. Therefore, the use of hard dollar compensation is becoming more and more frequent. In the case of transactions in which the broker acts as the contracting entity, the undertaking has taken appropriate measures to ensure that the commissions paid under the agreement are sufficient to cover the value of the goods or services to be received and the costs of execution; and if ESMA`s initial proposals are accepted, discretionary portfolio managers may no longer be able to receive investment research from brokers, unless they pay for such research themselves, increase administrative fees to absorb additional costs or use client-funded research payment accounts with the client`s agreement. An example of the illegal use of undisclosed sweet dollars could be if an investment fund manager pays commissions to a dealer broker and the broker provides furniture to the fund advisor in exchange. Similarly, the advisor of a registered investment fund cannot send brokerage to a Wire-House to provide “shelf space” and marketing advantage to the family of funds. Such brokerage agreements, which trade favors in exchange for the excess commissions of institutional clients, have been criticized by financial market authorities. . . .