The latest  SEC Web posting on the issue said the proposal for using client assets to buy research and brokerage services says that:

• eligibility of brokerage and research services for safe harbor protection is governed by the criteria in Section 28(e)(3),consistent with the Commission’s 1986 “lawful and appropriate assistance” standard.
• “research services” are restricted to “advice,” “analyses,” and “reports” within the meaning of Section 28(e)(3).
• physical items, such as computer hardware, which do not reflect the expression of reasoning or knowledge relating to the subject matter identified in the statute, are outside the safe harbor.
• market, financial, economic, and similar data would be eligible for the safe harbor.
• brokerage services within the safe harbor are those products and services that relate to the execution of the trade from the point at which the money manager communicates with the broker-dealer for the purpose of transmitting an order for execution, through the point at which funds or securities are delivered or credited to the advised account.
• mixed-use items must be reasonably allocated between eligible and ineligible uses, and the allocation must be documented so as to enable the money manager to make the required good faith determination of the reasonableness of commissions in relation to the value of brokerage and research services.
• money managers must make a good faith determination that commissions paid are reasonable in relation to the value of the products and services provided by broker-dealers in connection with the managers’ responsibilities to the advisory accounts for which the managers exercise investment discretion.
• broker-dealers must be financially responsible for the brokerage and research products that they provide to money managers, and they must be involved in “effecting” the trade.

The latest SEC release also details a series of questions for which the SEC is seeking answers. Those questions include:

• How would investors, money managers, broker-dealers, and others be affected by the Commission’s interpretive guidance that client commissions cannot be used to obtain computer equipment as “research” under Section 28(e)?
• Does the Commission’s interpretation offer appropriate guidance as to the eligibility of market data and trade analytical software under Section 28(e)?
• Does the Commission’s interpretation offer sufficient guidance as to the eligibility of “brokerage” services, functions, and products under Section 28(e)? How would this guidance affect existing arrangements or practices? Is the Commission’s temporal standard sufficiently clear?