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  • TradingScreen 10:31 on March 12, 2014 Permalink | Reply
    Tags: dealer, , foreifgn exchange, , , real-time TCA, settlement, , three-quotes rule,   

    Top Five Worst Practices for Foreign Exchange TCA 

    By Jon Fatica, Global Head of Analytics, TradingScreenjonfatica.jpg

    Buy side interest in Transaction Cost Analysis (TCA) has reached new highs after potential rigging of FX fixings was uncovered.

    As the buy side ponders whether they have “left money on the table,” many  firms have realized that  Transaction Cost Analysis is a “must have,” rather than “nice to have.”

    Many potential buyers of TCA are working off compliance checklists of best practices to adopt. Unfortunately, these lists are far from foolproof; adopting these best practices won’t ensure lower transaction costs, improved transparency into the full investment process, or improved execution quality.

    Rather than produce yet another best-practice list, I thought it might be more helpful to create a list of WORST-practices – things to definitely avoid – to educate buyers on how to stay away from expensive TCA mistakes:

    1. Approaching Foreign Exchange Execution As An Afterthought: At many firms, foreign exchange settlement is a trading afterthought in the sense that it is just an operational process and not a risk-taking activity. This creates an ironic situation where traders sweat and fret over local currency price improvement, only to give it all away, needlessly, when the foreign exchange portion of the transaction is settled.
    2. Putting All Your Faith In Three-Quotes Rule: Obtaining three competing quotes on each transaction sounds like a good strategy to ensure that you are receiving competitive pricing. However, it ignores other more sophisticated execution tactics and the timing of the transaction. For example, obtaining three competing quotes near the volatile fixing time of day can produce pricing that is much worse than other highly-liquid times of the day. There are many tactics involving timing, size of order (spread rises geometrically by size of order), use of algorithms, partial/optimal netting, and many other criteria that need to be in the trader’s tactical arsenal to ensure best execution.
    3. Not Being Able To Access The Data After The Trading Is Done. Many traders cannot export their transactions from their execution platform for analysis. Obviously, this limits their ability to analyze it. Because foreign exchange lacks a centralized system of record, it’s critical for users to find a way to see the bigger picture of aggregate pricing, across dealers, and over time. Having multi-dealer, streaming data available for analysis in an integrated OMS / EMS platform is the new gold-standard for being able to produce meaningful transaction cost analysis, especially within foreign exchange.
    4. Maintaining Dealer Relationships That Are Opaque, Or A Bit Too Cozy. There is nothing wrong with a dealer taking a trader out for some surf and turf, as long as that broker is supplying superior execution as well. It’s important for buy side firms to have transparency into execution costs of all dealers, and pay special attention to relationships where transaction costs are consistently, or even “occasionally,” high. Otherwise, that steak and lobster could turn out to be the most expensive meal that a firm ever pays for.
    5. Having TCA That Is Purely Retrospective, And Detached From Trading.  The best TCA insights won’t do a firm any good if nobody is paying attention to the poor grunt producing  the reports. At many firms, the transaction cost analysis function is separated from trading, producing backwards -looking analysis that has little impact on the day-to-day operations of traders. This retrospective TCA can be important, as long as those insights are read and acted upon to shape future trades. It is even better when traders can see real-time TCA integrated into their workflow, as this can actually improve alpha, in addition to helping traders avoid some expensive mistakes.

    Transaction Cost Analysis is an essential safeguard for the buy side to ensure that it receives best execution. Now, more than ever, it’s important for the buy side to have as clear an understanding of the underlying transaction costs and changing micro market structure, as they would their overall returns.

    That said, great tools don’t work without great procedures behind them, and great analysis offers no insight if it’s never read.

    Adopting best practices, and carefully avoiding the worst-practices, will ensure better transaction quality and lower costs for all investors.

     

    LEARN MORE:

     

     
  • TradingScreen 11:05 on December 18, 2013 Permalink | Reply
    Tags: , portfolio manager, real-time TCA, , , , web-based tca, web-based transaction cost analysis   

    TradingScreen’s New Web-Based Transaction Cost Analysis 

    TradingScreen has introduced a host of new functionality on its web-based Transaction Cost Analysis (TCA) platform.

    TradingScreen’s web-based TCA reporting tool provides performance information on  alternative execution strategies and easy-to-use graphical presentation at both the portfolio manager (PM) or order level, and in real-time at the execution level.

    Click on the video below to see a short overview of the functionality.

    Web-Based TCA Link

     

    Click the link below to register for a view of the full 20-minute walk-through of the new functionality or to sign up for a free transaction cost analysis of your trading.

     

    LEARN MORE:

    Learn more about TradingScreen’s real-time Transaction Cost Analysis.

    Read recent thought leadership and articles on TCA.

    Sign up for a demo of TradingScreen Transaction Cost Analysis.

     
  • dzweifler 09:12 on May 9, 2013 Permalink | Reply
    Tags: , , , , , foreign, , , , , , , , , real-time TCA, , , , tabb forum, ,   

    Jean-Philippe Malé Discusses The Forex Storm on Tabb Forum 

    Jean-Philippe Malé, head of OTC for TradingScreen, discusses how regulation, litigation, and technology have created a “perfect storm” for foreign exchange in an interview with Les Kovach of the The Tabb Forum.

    JP at Tabb Forum

    Jean-Philippe discusses how the buyside is managing the need for increased transparency and insight into transaction costs with cost-effective tools that drive alpha. Click on the picture above to view the video on the Tabb Forum (free with registration), or learn more about TradingScreen’s cloud-based foreign exchange and transaction cost analysis (TCA) solutions for the buyside.

    LEARN MORE:

    Could foreign exchange lawsuits hit the buyside?

     

     
  • dzweifler 08:55 on May 3, 2013 Permalink | Reply
    Tags: , bny mellon, , , , custody, , , , , , , , , mutual funds, real-time TCA, , , ,   

    Are Mutual Funds The Next Target for U.S. Forex Lawsuits? 

    We’ve all seen the news about how a U.S. federal Judge has ruled that the government can sue BNY Mellon over mispricing of FX transactions for some custody clients. There is also a good deal of analysis of how this might be a template of sorts for similar, sell-side lawsuits.

    The question now is whether the buy side might be the next in line for similar lawsuits.

    Mutual funds have an obligation to achieve the best pricing available on the securities they buy or sell with investor funds. That includes the cost of any associated foreign exchange settlements. Even if fraud occurred at the custodian institution, there is a seeming inconsistency that fund managers, who sweated out every fraction of a penny that a security rose or fell, then delegated a huge portion of the total transaction cost to a third-party in rather cavalier fashion… especially when it turns out that the third-party might not have been delivering good pricing.

    It’s interesting to consider whether investors might now be looking at these fund managers and wondering whether they exercised adequate due diligence around foreign exchange transaction costs.

    Regardless of whether the recent wave of lawsuits hit the buyside, it’s clear that the pressure is on for fund managers to demonstrate increased transparency.

    Now, buyside institutions are moving quickly to adopt tools like real-time transaction cost analysis for FX, which can demonstrate their traders’ value-add, including their ability to maximize returns and minimize associated costs. This makes sense, because the firms that do not will have a harder time retaining investors and risk raising the ire of regulators.

    In addition to the relationship-management benefit that real-time TCA for FX provides, it also delivers actual results: Increasing returns by lowering transaction costs.

    To be sure, adopting new tools requires traders adapt to changes to their existing workflows.

    That said, these tools DO add value. And because there are a cloud-based providers of these services (like TradingScreen), this additional insight doesn’t come with a corresponding increase in overhead around staff and hardware.

    LEARN MORE

    Sign up for a free transaction cost analysis of  your foreign exchange, or for more information about TradingScreen’s TCA for foreign exchange available through the cloud.

    Or see recent thought leadership and news coverage about:

     
  • dzweifler 10:59 on April 3, 2013 Permalink | Reply
    Tags: , , , , , FX Invest, , , , , , real-time TCA, Saima Farooqi, ,   

    TradingScreen CEO in FX Week: Why Multi-Asset Platforms are Better for Forex 

    Philippe BuhannicTradingScreen CEO Philippe Buhannic is the voice of multi-asset systems in a great article by Saima Farooqi in FX Invest and FX Week covering foreign exchange platform consolidation.

    Philippe argues that the need for a holistic view of risk provided by multi-asset platforms like TradingScreen is superior to what traders can obtain from FX-only platforms.

    “If you are a massive asset manager, with complex risks ranging from centrally cleared derivatives, to FX and fixed income, and multiple interrelationships between the asset classes, why would you go for four/five platforms?” he asks.

    He says that not only does TradingScreen calculate a cross-asset view of risk… it goes beyond the reval rate and position calculation offered on incumbent multi-asset order management systems to offer global clients a global view of all their trades, “so they can cross their trades internally if they want to”.

    “We do a lot by way of order routing from one desk to another within a client. It’s almost like an infrastructure to them,” says Buhannic. “It’s not plugging FX transactions into the system and revaluing them. We allow them to manage them before that process. We can net the transaction globally if needed; we can do that by construction because we are in all data centres.”

    He also highlights TradingScreen’s independent trading analytics. “It’s not simple to do this, because FX is fragmented; you have different prices for different quantities; you can get very different prices via phone than from a pricing engine; you can have a price on the futures market which is equivalent to cash; you can have a price through the crosses, through the forwards market. If you really try to determine what the best available price is, it is extremely complicated to start,” says Buhannic. “It’s a minefield, whereas with equities there is a tonne of market data.”

    In the past year, Buhannic says that while it has made some big client wins from rival multi-dealer FX systems such as Axa Investments from FXall, the majority of clients have come from single-dealer platforms, where he claims best execution is hard to prove to end investors.

    Read the full article here (with subscription)

    Learn more about how TradingScreen is winning major deals in foreign exchange with its multi-asset system

     
  • dzweifler 08:28 on February 27, 2013 Permalink | Reply
    Tags: , , , , , , , , real-time TCA,   

    TradingScreen Lets You Test-Drive TCA for FX for Free 

    TradingScreen is saying the F-word with a FREE test drive of its Transaction Cost Analysis (TCA) for foreign exchange.

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    • Do you know if your foreign exchange spreads are as good as your competitors?
    • Are you seeing the full depth of foreign exchange market liquidity when you trade?
    • Do you have the right tools in place to assess your foreign exchange transaction costs?
    • Do you have the right processes for assimilating and trading on this information?

    If the answer to any of these questions is “no,” then foreign exchange execution is an afterthought in your institution… and you are probably leaving money on the table in the form of higher fees and wider spreads.

    ts_registerbutton

    Register for a free analysis of your transaction costs to see how TCA could make a difference in your foreign exchange business.

    Some terms and conditions apply. Click the registration button to see full details.

    LEARN MORE:

    Article: Learn about the The Top Three Transaction Cost Analysis System “Must Haves”

    Video: Learn how Real-Time TCA for Foreign Exchange can help you generate alpha and avoid some expensive mistakes.

    Webinar: Learn about Best Practices for Best Execution.

     
  • jfatica 08:26 on February 27, 2013 Permalink | Reply
    Tags: , , , , , , , independent trading platform, , , , over-the-counter securities, real-time TCA,   

    The Top Three Transaction Cost Analysis System “Must Haves” 

    Transaction cost analysis (TCA) seeks to shed light on how fees and market impact add to the cost of buying or selling a particular security. These costs take the form of higher commissions to a particular broker or information leakage and liquidity issues, causing wider spreads between bids and offers, and price movement.

    Increased regulation, compliance oversight, lawsuits, and the migration of OTC securities to electronic execution are just a few of the industry trends that are driving the buy side’s widening interest in TCA. But, these “it’s important to eat your vegetables” reasons aside, the best argument for adopting TCA is the fact that it helps generate alpha, by lower the cost at which you buy and sell securities increasing total returns.

    As the buy side moves to adopt TCA tools more proactively, there are three main things that firms should look for when assessing systems: (More …)

     
  • dzweifler 11:23 on July 25, 2012 Permalink | Reply
    Tags: , , , , , real-time TCA, ,   

    Transaction Cost Analysis Webinar: Best Practices For Best Execution 

    The replay of our June Transaction Cost Analysis (TCA) Webinar – Best Practices for Best Execution and The Next Generation of Transaction Cost Analysis – is now available.

    In this 20 minute video, TradingScreen’s Jon Fatica, head of analytics for TradingScreen discusses:

    • What “Next Generation” TCA looks like
    • How it differs from traditional TCA
    • How to use real-time TCA to avoid mistakes in a multi-asset environment

    UPDATE: You can now view this video without registration – simply click on the video below:

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    If you would like more information, register here.

     
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