The buy side is increasingly looking to trade cost analyst – TCA – to help it meet its growing mandate for transparency.
Whether is from regulators, legislators or Joe Q Public, asset managers are under more and more pressure to document myriad trade details. The institutional investor has been employing TCA as a means of trimming costs and fees, which in the end, are what regulators et al are trying to minimize and disclose to an investing public that feels it has been either uninformed or misled about.
And the need for TCA is not just for equities trades anymore. As the buy side has entered an era of multi-asset trading – foreign exchange, fixed income securities and other asset classes – TCA has been the analysis tool of choice, according to a recent report from market consultancy Greenwich Associates.
The report, “Transaction Cost Analysis: Opportunities Within and Across Asset Classes,” noted that asset managers are relying on TCA systems to give them increased transparency into their execution and order routing in order to optimize trading performance while meeting the demands of regulators seeking documentation of best execution compliance.