Bolsas y Mercados Españoles (BME), the operator of all stock markets and financial systems in Spain, has launched a new Big Data platform for its TCA & Best Execution service. Operated by its subsidiary BME Inntech, the new service caters to securities brokers and broker-dealers as well as fund managers.
BME’s transaction cost analysis (TCA) service allows market participants to analyse the quality of execution they receive from their brokers. The offering also enables participants to implement and codify their best execution policy in the software and ensure those parameters are met using data from a broad range of sources.
With the addition of big data solution, users will have the option to generate a more detailed TCA report which has a summary and cost analysis broken down by market, client, broker and trader.
To maximize the use of big data collected from registered brokers, the Spanish trading group says it allows clients to assess execution quality by comparing prices negotiated by the broker for each stock with those posted by other market venues.
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Increased Adoption of TCAs by Market Participants
Using this model, the tool assesses trading performance and calculates implicit costs under a variety of market conditions, providing traders with the ability to assess historical trading data with comparisons of liquidity providers and data visualization technology.
“Over the last few years, we have seen a decrease and standardisation of the commissions (explicit costs) generated from the intermediation of orders. In this context, the implicit execution cost resulting from order management takes on much greater importance. More and more investment managers rely on TCA reports to measure this implicit cost and use this information in their broker selection procedure”, says Berta Ares, General Manager of BME Inntech.
Financial services clients will benefit from an integrated, end-to-end solution that captures, consolidates and reports all data required for compliant transaction reporting.
The integration of big data capabilities will support BME’s position as a technological partner, which provides services and solutions covering the entire value chain.
The future of TCA tools is promising due to increasing transparency requirements that define the conduct of all market participants, including the need for buy-siders to prove the best execution. For instance, MiFID II requires participants to achieve the best possible result for clients, taking into account a range of execution factors.