TZ - Transaction COST Analysis (TZ - TCA)
TZ -TCA offers the following features:
- Provides access to your own data for immediate historical analysis and archiving.
- Assess performances in Best Execution under different verticals i.e. Brokers, Teams, Platforms and Counterparties etc.
- Implementation Shortfall and the Transactional Cost of executing and whether swift order routing would have facilitated a better execution price or a “wait and see” approach in the face of high liquidity on the opposite side of the price.
- Calculating an “Arrival Price” versus the “Actual Execution Price” to indicate the “Implementation Shortfall Cost”
- Calculating “End of Day” versus the “Arrival Price” to show the gain or loss to the Portfolio Manager vs the “Implementation Shortfall Cost” for analysis.
- Multi-Venue tracking for execution prices and liquidity.
- Total Access to all data stored in TZ and therefore the ability to data mine at any stage and formulate reports and Tests in seconds.
Investment Managers, Regulatory Compliance Professionals and Traders are obliged by the regulators to take “All sufficient steps” to facilitate the execution of transactions at the best possible price. This has been upgraded in MiFID II from “Reasonable steps”.
The reporting or chain of command may be different but the responsibility is inherent in all Financial Institutions. TZ is here to redress the balance and to give transparency throughout the process so that errors in execution can be addressed and resolved and not left to become systemic risk.
MiFID II highlights that ‘cost’ will still be considered one of the key factors to execution quality for retail clients. Best execution for retail client orders is assessed on the basis of ‘total consideration’. Total consideration is defined as the “sum of the price and the costs incurred by clients” and represents “the price of the financial instrument and the costs relating to execution” including “all expenses incurred by the client which are directly relating to the execution of the order, including execution venue, fees, clearing and settlement fees and any other fees paid to third parties involved in the execution of the order”.
FCA’s thematic review of Best Execution and Payment for Order Flow - distinguishes between explicit external costs and explicit internal costs for retail client orders.
TZ -TCA moves with the customer and adapts to new regulatory developments real time and does not need to initiate projects to develop new tests, reports and accessibility. TZ-TCA allows you to look back and see the lay of the land as the trader saw it and enables the user to decipher if the correct checks and balances were adhered to in line with the institution’s Best Execution policy. The market data aspect of TZ enables the user to have prescient information prior to the trade being executed in retrospect.
- Run preset reports, set alerts or compile bespoke reports TZ can deal with it all and allows exportation to Excel and .pdf. Monitoring of trader performance, broker analysis or even to assess the possible implementation shortfall issues that are created in an institution’s internal processes and how they can be alleviated once alerted and highlighted.
- Explicit “External” costs vs Explicit “Internal” costs can be allocated and calculated to enhance the internal policies in place as to why a particular venue or broker was selected and if the selection was in the client’s best interest.
- Multi Venue Analysis enables venues to be benchmarked as a comparison and further enhancement of the landscape in front of the trader before execution. This may result in savings on exchange fees or hidden costs when deciphering if the correct venue was selected at the time of execution.
- Analysis of “Arrival Price” versus “Execution Price” and the relevant shortfall incorporating Portfolio Manager daily performance in a particular asset versus executing desk.
- The ability to publish Execution Policy direct from TZ
- Interactive Exportable Graphs for MI of the chosen tests or bespoke reports.