Joel Clark
Joel Clark

Transaction Cost Analysis: Taking a new approach to measuring FX execution trading operations

As FX market participants deal with the evolving market structure and prepare for the implementation of MiFID II, there is growing demand for more sophisticated trade analytics to improve decision-making in real-time. Joel Clark investigates.

First Published: e-Forex Magazine 75 / Trading Operations / March, 2017

Advances in technology have given consumers control over their lives in ways they could scarcely have imagined a decade ago. Holidaymakers, for example, can now take virtual tours and read reviews of resorts before they book, while travellers can compare transport options online to get to their destinations more quickly and cheaply. These facilities raise the bar on performance and mean shoddy service can no longer be tolerated. In much the same way, advances in transaction cost analysis (TCA) are shaking up the foreign exchange market and shedding light, often for the first time, on the true costs of trading currencies with particular counterparties. New sources of data and new technology providers are bringing more sophisticated analytics to the market, enabling buy-side firms to take greater control over trade execution. “We have seen TCA evolve significantly over the past few years,” says John Cooley, head of FX buy-side trading at Thomson Reuters. “The analytical needs of...continued

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