AXA has a pricing tool that interacts with the pre-trade screen , displaying counterparties in real time by slippage and the spreads that would be incurred by trading with that particular broker mapped against the market average as a benchmark . In addition , the company uses posttrade data to directly influence the pre-trade summary . " We made the choice to start analysing Market data some years ago , as we quickly understood that market data are so useful and that we could enrich our knowledge and then to have a better understanding of our counterparties as well as our trading behaviours . We learnt a lot from market data and we still learning . All the market data that we either received from our counterparties , market vendors or simply our own market data , enable our traders to achieve more effective trading services . As soon as that we set up our trading tools with all the metrics stored in our database , we were able to run any analysis that we need to make our business more efficient . So first , we use market data internally at trading level , to define which trading strategies would be the best for a specific trades or programs ; Will it make more sense to use Etrading or old school Voice trading ?, and additionally , we used also market data to provide detailed business reports to our counterparties , which also enable them to really know who we are , in which specific sectors we need liquidity access . Finally we obviously use market data for our TCA ." The firm ’ s TCA was envisioned as a way to measure trading and make sure the firm is not trading at the worst level . However , one of the immediate challenges was how to deal with the data the firm has stored over the last five years . The firm analyses the bidoffer spread , and the results of that analysis indicate that in bad market conditions , spreads typically widen . This information was then fed back into the trading desk as a warning sign , a possible trigger that should be observed carefully and potentially acted upon . The second aspect of AXA ’ s data strategy is to aggregate the data and create a way to compare the firm ’ s own execution against a reference price to evaluate AXA ’ s performance . " We can use TCA for a wide range of benefits . As a Head of FI Trading , TCA ( in reality I prefer to speak about Trading Performances Analysis ( TPA ) rather than Transaction Costs Analysis ( TCA ) which implies a ‘ cost ’ and not suggest any savings from buy side FI traders ) enable to demonstrate to clients the added value of a global centralized trading platform and so measure the trading performances of the FI Trading Team , as a whole . So trading performance analysis is a straight continuation of the market data output . It helps to define trading strategies , to understand where traders should pay more attention to reduce market impacts for clients . Moreover , doing a retrospective analysis our of market data enable us to profile our counterparties , and identify which one will be the best placed to offer to our traders the liquidity they need with the minimum market impact , on a specific instrument , from global players to niche players , depending the calibration of filtering criteria . It ’ s a virtuous circle where the Post Trade TCA and data bring to powerful prices discovery by running the pre-trade . Finally I use it to demonstrate that even if the liquidity is challenging , AXA IM traders found it and still find it , but not for free , by showing our trading reality vs a
16 www . buysideintel . com June 2016