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Equities
© Copyright K & K Global Consulting Ltd . ( K & KGC ) 2017
Source : Equities Best Execution 2016 , December 2016
The role of TCA continues to be a delicate topic for the European buy side in 2017 , as traders have stated that trading teams can be reluctant to trade a block if it is going to look worser in the TCA – despite the fact that doing a block might actually be in the best interests of the PM . This is a cause for frustration among heads of trading , yet with the increasingly onerous regulatory environment under MiFID II , there is more pressure than ever before on traders to evidence their trading decisions with data , not least including TCA . Whether this is ultimately in the interests of the end-investor remains to be seen .
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Several other challenges stand out . Among these , the continuing shift towards passive trading strategies is one . Meanwhile , intra-day liquidity continues to thin out as participants increasingly concentrate on the market close . One senior buy-side trader based in London recently estimated that 90 % of the day ’ s volume is to be found at the close .
As MiFID II is approaching , the buy side need to firm up their best execution policies and processes , their broker selection process and how to manage their dealing commissions . Establishing a more robust framework for pretrade analysis is needed .
March 2017 www . buysideintel . com
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