Best Execution: the State of Play

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This GreySpark report determines that best execution generates distinctive expectations, benefits and delivery methods across buyside and sellside players and technology providers.

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The best execution requirement serves client’s interests in an equitable trading environment, mitigating the advantage of sellside market information. Highlighting buyside concerns with best price and sellside interest in liquidity and low latency, this report establishes that technology providers bridge these matters through execution management and benchmarking solutions.

Such technology is continuously advancing, offering new solutions accompanied by an increased service orientation of providers. This report explores responses to regulatory calls for best execution as APAC begins to fall in line with EU and US policies.

This report addresses a number of key questions related to buyside interests in: execution performance related to information and services; how the sellside respond to best execution requirements; the technology available to support implementation of best execution; and how the market is responding to calls by global regulators for best execution requirements.

Methodology
The hands-on industry experience of GreySpark consultants, coupled with buyside, sellside and technology provider face-to-face interviews, underpins this research. Industry survey data and a review of technology providers with and without transaction cost analysis (TCA) offerings further our analysis.

Published on: 24 Oct, 2011

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Description

Best Execution: the State of Play – Table of Contents

  • 1.0 The Importance of Best Execution and Execution Quality
  • 2.0 The Need from the Buy Side to Measure Execution Quality is Rising
    • 2.1 Best Execution is More than Just a Price
    • 2.2 Definition of Best Execution is Dependant on the Client
    • 2.3 Technical Maturity of the Toolset Currently Used by the Buy Side Driven by Trade-off between its Costs …
    • 2.4 … And the Importance of Execution Quality to Overall Strategy
    • 2.5 There is Growing Demand for Affordable Tools to Assess Execution Quality
  • 3.0 Sellside Perceives Best Execution as a Product to Win Market Share
    • 3.1 There Are Numerous Trading Strategies to Fit the Needs of the Buyside
    • 3.2 There are a Handful of Tools to Evaluate Trade
    • 3.3 To Be Competitive a Scale Is Needed
    • 3.4 Systematic Internalisers Can Help Provide Best Execution
    • 3.5 The Maker-Taker Model Can Interfere With Benefits from Internalisation
    • 3.6 Proof of Execution Quality Is a Product
  • 4.0 Technical Solutions to Monitor Quality of Execution
    • 4.1 Technology Enabled Delivery and Monitoring of Best Execution
    • 4.2 Execution Management System to Enhance Effective Execution
    • 4.3 Benchmarking and Reporting Are Used to Evaluate Execution Quality
    • 4.4 Transaction Cost Analysis Supports Evaluation of Execution Quality
  • 5.0 Regulators Are Enforcing Best Execution
    • 5.1 Europe and United States Lead in Regulation of Best Execution Practice
    • 5.2 Upcoming Regulations Will Strengthen Obligations to Provide and Prove Best Execution
  • 6.0 Upcoming Trends and Competitiveness on the Markets
    • 6.1 Challenges in Obtaining an Objective View on Execution Quality
    • 6.2 Changes in Technology Offering
  • 7.0 Appendices
    • 7.1 Current TCA offerings