Buy-side Perspectives Issue 4 - Page 16

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
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 16 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 www.buysideintel.com 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 ۝[X][ۈوHX\]]H]] ][Y[HY[œ]YY\[\[\BY\[^H[ܙH][[ۂYXHX\][\X܈Y[˂[ܙ[ݙ\[H]X]B[[\\\وX\]]H[XB\ٚ[H\[\\Y\[Y[YHXۙH[HB\XYٙ\\Y\H\]ZY]H^HYY]BZ[[][HX\][\X ۈBXYX[[Y[ Hؘ[^Y\XH^Y\\[[H[X][ۈو[\[ܚ]\XK]8&\H\[\\H\HBYHH[]H[œ\[X\\ݙ\HH[[HK]YK[[HH\H]™[[ۜ]H]][YH\]ZY]B\[[[VHSHY\[][[[] ]܈YKH[\Y[X[]HB[H M