THETRADETECHFX DAILY from the floor
“ Consistency is key . The last thing we want is for a counterparty to shoot the lights out one month then be bottom of the pack the next . We also understand that counterparties will have their strengths and weaknesses and understanding that is incredibly important .”
TCA to LPA : The changing role of the buy- and sell-side
The TRADE speaks to BHAV TRIVEDI , manager for dealing UK at AustralianSuper , to discuss the interplay and key differences between trade cost analysis ( TCA ) and liquidity provision analysis ( LPA ), the key considerations when applying these in trade execution , and how the relationship between the buy- and sell-side is being affected by TCA and LPA developments .
Has there been a move from TCA to LPA ? I wouldn ’ t say there is necessarily a move away from TCA as such . Liquidity Provision Analysis ( LPA ) can mean many things to many people , be that from a pre-trade , in-flight or post-trade perspective . All of these are as important as each other depending on the purpose you ’ re using it for . We still use core- TCA from a post-trade analytics and pre-trade counterparty selection perspective , however LPA from a counterparty selection perspective is very important at every part of the trade .
From a pre-trade perspective , understanding if a counterparty has local franchise for emerging market trades , or how engaged a counterparty is typically in seeing offsetting flow , and how active a salesperson is in terms of reflecting
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