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exchange , you can be pretty granular and precise with the analysis that you ’ re doing . Something that doesn ’ t extend to all corners of the markets .
“ In fixed income , you ' ve got things that are exchange listed , you ' ve got very liquid bonds that trade as freely as equities and they ' re somewhat easier to measure . However , 90 % of bonds don ' t trade from issuance to maturity . So how do you even know what the right benchmark could be for something that doesn ' t trade if you were forced into that execution ?” questions Mark Montgomery , head of strategy and business development at big xyt .
“ The more regulated the market and the more exchange driven it is , the more effective I believe the TCA can be .”
Over the years , TCA within asset classes such as fixed income has grown into a more mainstream product , being used by investment institutions worldwide .
However , “ each asset class has to be taken on its own merits , as they have unique market microstructures and nuances which have to be taken into account ,” argues Richter . “ We see much more of a compliance use case in these asset classes as opposed to the preferred actionable insight
“ As a TCA vendor , we can provide bestin-class proprietary metrics , but it all comes down to how the firms are using the data .”
MICHAEL RICHTER , GLOBAL HEAD OF TRADING ANALYTICS AT S & P GLOBAL MARKET INTELLIGENCE
30 // TheTRADE // Q1 2024