BME Launches Big Data Platform
- Big data will serve as a catalyst for significant improvements in the process and result of the TCA & Best Execution reports
- The new solution enables reduced computing time and customised MiFID II-compliant reporting
BME launched a new Big Data platform for its TCA & Best Execution service through its Innovation subsidiary BME Inntech. This service is aimed at securities brokers and broker-dealers as well as fund managers.
The Transaction Cost Analysis (TCA) reports are used to gauge the quality of execution management by the different brokers that process orders from their institutional clients.
The new TCA & Best Execution platform has drastically reduced computing times and allows users to generate customised reports on a specific order flow in just a few seconds. Another improvement incorporated is linked to traceability and data quality management.
“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.
— Pablo Malumbres (@PabloMalumbres) September 30, 2020
Following the implementation of MiFID II, investment services firms must carry out a thorough monitoring of the quality of execution that they are receiving for their clients’ orders, in order to obtain the best possible result for them. Among other requirements, firms must justify their trading venue selection policy to their regulators, based upon quantitative data. The Best Execution reports allow firms to estimate the maximum profit they could obtain if they incorporated new trading venues and compare it with the cost of the infrastructure needed for it. This allows them to optimise investments in IT and justify their execution policy to their relevant authority.
Streaming blocks change the basis of matching and price discovery so institutions can find new liquidity.
Concerns have been expressed around the value of these reports.
Innovation in displayed markets is important as off-exchange volumes are rising.
The new service will help improve execution quality assessment across brokers.
The post-trade analytics tool is designed to provide transparency and forensics around client executions.