Description
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.
Transaction Cost Analysis – Table of Contents
- 1.0 Transaction Cost Analysis Overview
- 1.1. TCA is Finding New Ground in the Post-financial Crisis Landscape
- 2.0 TCA Expands Across Asset-classes and Across the Trade Lifecycle
- 2.1. Advance Across Asset Classes
- 2.2. Advance Across the Trade Lifecycle
- 2.3. Broker Assessment Criteria
- 2.4. Industry Awareness of TCA Capabilities
- 3.0 Effective Use of TCA Requires Firm-level and Industry-level Changes
- 3.1. TCA Benchmarks
- 3.2. Data
- 3.3. Technology Development
- 4.0 The Future: Approaching Transaction Cost Analysis Holistically
- 5.0 Appendices
- 5.1. Regulations Encouraging Usage of TCA
- 5.2. Glossary of Terms
- 5.3. Table of Figures
- 5.4. Methodology
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