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Is Your Trading Data Intelligent?

Lauren Torres

The trading process is inherently powered by data. In the current economic environment, with regulatory and investor demands for best execution increasing, the quality of the data powering the trading process is more important than ever. How quickly the trader can process the data, as well as the quality and the usability of the data, directly impacts the ability to deliver best execution. Context, as well as quality, matters.

Today, information is moving faster than it ever has before, and pre-trade TCA must support the trader’s ability locate liquidity in the market, quickly act on the data presented, and make the best execution. This means that the need for tools that can explain the impact of a trading decision in the context of the portfolio, as well as the current market, is greater than ever before. TCA tools that merely funnel in information are no longer enough; useful tools must be able to not only process information through the lens of the trader’s goals, they must also deliver this information to a trader in a way that enables him or her to act on the information fast.

So, when is the information helpful? Our clients tell us it’s summary information presented with intelligent analysis that can quickly tell them the impact of a move on the market. Information, rather than data points scattered across the display, that is synthesized into simple-to-understand language, and can answer questions like:

  • Where is liquidity located now? Is it primarily on or off exchange?
  • What if we make a decision that will need to be course-corrected due to a volume spike? Can we quickly pivot our strategy, and how?
  • How will the total cost of my execution be impacted if I choose to break up the order across multiple venues?

One of our TCA partners, OTAS (a Liquidnet company), takes fragmented data, back-tests it against historical performance, and summarizes it for users in quick, actionable insights. The point of these tools is to cut through the noise on the trader’s desktops and create a layer of market impact analysis in an easy-to-follow narrative tailored for the trader’s needs.

The key to ensuring this information will make a difference in execution is the integration we have created within trading workflows. For our clients, we have seamlessly embedded OTAS analytics into the Eze EMS, ensuring that traders have access to actionable intelligence. An example of this integration is the linking between analytics windows and trading tickets. Enter a symbol once and all linked grids update.  Users can also target OTAS alerts to include symbols in their EMS blotter, ensuring that relevant, crucial updates arrive in a timely fashion without becoming overwhelming.

Demands of recent regulations, such as MiFID II, have put these insights in the spotlight, and even funds exempt from MiFid II have seen the ripple effects. In both cases, investors have demanded that investment managers not only capture best execution, but also explain how it was achieved. Regulation has only brought greater awareness to investor accountability, and drives investment managers to become more transparent about how and why they make execution decisions. It’s important to note that best execution in a post-MiFID II world not only means delivering differentiated trading analysis to your investors – it demands execution analysis be part of the process used make the best trade.  Intelligent TCA should provide portfolio managers and traders with the tools create, and act on meaningful insight.

For more information on intelligent trading within Eze EMS, click here.

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