[ I N - D E P T H
|
T C A ]
Unlocking
TCA
Hermes Investment Management was the recent winner
of mid-cap trading desk of the year at The TRADE’s
annual awards. Here, head of trading, Daniel Nicholls,
tells Hayley McDowell about the asset manager’s
process for effective use of transaction cost analysis.
I
t’s no secret that trade or transaction cost analysis (TCA) has
become one of the most important components of the buy-side
trading desk. In light of market structure changes due to increased
regulation and the all-encompassing endeavour for best execution, it
has never been more critical for traders to get to grips with in-depth
analysis of exactly what has happened with each and every execution.
The idea is that with effective TCA processes, not only can traders
confidently showcase to regulators that they are indeed meeting best
execution requirements, but they can also gain once-shrouded insights
into broker routing decisions, algorithms, and trade performance
16 // TheTRADE // Spring 2020