Buy-Side Technology Awards 2014: Best Buy-Side TCA Tool—ITG

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Victor Anderson, Yann Kwan, Masami Johnstone, Brian Moore and Michael Sparkes.

While transaction-cost analysis (TCA) as a concept has been around the capital markets for a long time, the technologies supporting such functions have never had to be as rich or sophisticated as they do now. Buy-side clients expect not only basic information about where their orders were executed and how much it cost them to execute a given trade, but also a range of other indicators. With the proliferation of execution venues, these can include market impact, dark/lit execution levels, and, increasingly, pre-trade and post-trade requirements.

With its TCA offering, ITG has been ahead of the curve for quite some time. The firm embraced TCA for foreign exchange (FX) at a time when it was still pretty much a pipe dream for most other providers, and these days its platform stretches across equities, FX and futures, while its historic and real-time data offers wide coverage, with 70 countries included.

At the heart of ITG’s TCA tool is its Peer Database, designed to allow users to rank their strategy performance against similar firms, providing insight as to where clients should focus when it comes to order implementation and optimizing portfolios based on projected cost and impact. When this functionality is combined with Smart Monitor, ITG’s real-time data tool designed to allow users to monitor the impact their orders are having on the marketplace in real time, along with associated costs for on-the-fly adjustment, TCA steps out of the realm of pure analytics, into a powerful, active management platform. Adding ITG Smart Decision Analyzer to the mix enhances support for users’ decision-making processes, factoring in elements such as market volatility as well as the data accrued from the Peer Database and other sources.

In developing ITG TCA, the firm has not only taken a tool and implemented it with aplomb—it has also introduced novel and sophisticated ways to consider how TCA can best be applied to the trading process. It’s a synergistic and articulate way to approach TCA, given how firms are using data in numerous ways within their portfolio operations, and not just to measure cost. The fact that this is the second year in a row that ITG has won the TCA category at these awards—a fiercely competitive category in terms of the richness and refinement of the tools available to the buy side—speaks volumes for its ability to not only analyze transaction costs, but clients’ needs too, and adapt proactively to them.

At the heart of ITG’s TCA tool is its Peer Database, designed to allow users to rank their strategy performance against similar firms, providing insight as to where clients should focus when it comes to order implementation and optimizing portfolios based on projected cost and impact.
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