Beginning in the early 2000s, when the algorithms and software capable of performing transaction cost analysis (TCA) on a semi-automated basis first became prevalent, the definition of the function was always: a method of determining the effectiveness of a set of transactions performed by a counterparty – the key word within that definition being ‘effectiveness.’
Since MiFID II’s research unbundling rules came into force in January 2018, the ‘value’ of research has become a pressing question. The regulatory intention being to eliminate any practice of inducements to utilise execution services by setting explicit fees for the distribution and receipt of research materials.
In 2019, the global financial services industry is set to spend an estimated USD 50bn on the raw, historical markets and transactions data inputs required to fuel a broad spectrum of daily trading activities across all major asset classes.
Banks are one of the greatest engines for generating data: daily, they collectively produce petabytes of transactions, prices, risk metrics, customer information….
A decade after the financial crisis, the buyside (asset managers, hedge funds, institutional investors and large corporates) have changed at least as much as the investments banks that serve them.
Prior to the onset of the financial crisis and the subsequent wave of resulting global re-regulation, the majority of bonds and swaps trading activity within small-to-medium-sized asset management firms, hedge funds and wealth management firms was a game of dependencies.
Within the asset management industry, the recent rise in pure passive investing, based on traditional cap-weighted indices, is set to slow down in the near-future as more investors seek to diversify their portfolios while earning cheap alpha returns at near-beta fees.
The broker community and asset managers let out a collective sigh of relief last week as the Securities and Exchange Commission (SEC) issued a number of “no-action” letters to address clashes between the US government and the upcoming MiFID II regulations.