The emerging TCA landscape is shaped by forces driven by buyside and sellside firms, regulations and technology. The primary findings of the report are:
- Between 2014 and 2017, TCA solutions will continue to advance in equities, FX, listed futures and options, and fixed income.
- TCA is already becoming increasingly prevalent as a pre-trade and real-time function of the trading flow, expanding beyond the post-trade space.
- This is driven, among buyside and sellside firms, by client pressures and best execution requirements, cost transparency and trading electronification.
The report identifies several challenges to the effective adoption of a TCA tool, including:
- TCA benchmarks – the relative importance of various benchmarks and indicators used in TCA is changing. All buyside and sellside respondents to GreySpark’s survey of TCA usage are planning to use pre-trade TCA to determine optimal trading strategies by 2017.
- Organisational behaviour – users determine that it is sufficient to use only a TCA tool’s basic elements; they do not fully utilise the various indicators and benchmarks available to them
- Data – organisational and trade data must be effectively harnessed to address demand for the multitude of data elements required for TCA.
- Technology development – the method of TCA delivery will become increasingly interactive via on-screen reporting, while the frequency of this delivery will increase with real-time reporting experiencing a 69% rise, according to GreySpark’s survey.
Traditionally, TCA solutions are broker-provided or built in-house. However, a renewed emphasis on trading transparency is causing a rise in the number of third-party offerings on the market. These third-party offerings will increasingly be incorporated into existing systems, creating a more competitive space. Buyside and sellside firms will benefit from tools that are less costly than in house developments and analysis that is more in-depth than that provided by broker tools.
