Markit and Eze Software Team Up on TCA
A partnership between Markit and Eze Software Group will extend Markit’s Transaction Cost Analysis product is users of Eze Software’s order management system, the Eze OMS.
Through the integration, Eze Software clients can leverage Markit’s TCA product to view pre trade forecasts alongside their open orders in the Eze OMS trading blotter. Following the trade, the customer’s data is automatically processed by Markit’s TCA service to provide actionable trading insights that help reduce trading costs and identify liquidity.
“Eze Software is the leading OMS for hedge funds, and it’s precisely in the hedge fund community that we see the most challenge in TCA uptake,” said Henry Yegerman, director and product market specialist for Markit TCA. “Hedge funds have always been driven by alpha decisions made by the portfolio manager. They are becoming more conscious of incremental savings. That urgency for hedge funds make this new level of TCA most important.”
Eze Software customers are able to access Markit pre-trade estimates within the Eze OMS trading blotter. These forecast the market impact and estimated standard deviation of the planned trade to show the expected cost of implementing the position.
In addition to having the Markit pretrade estimate on their blotter to formulate new trading strategies, Eze clients can use execution-level TCA, to perform venue analysis to evaluate and proactively manage their brokers’ routing logic.
“It allows Eze clients to create more effective strategies that optimize their trading costs to determine whether they should be more aggressive in the market or more passive,” Yegerman said.
Customers can subscribe to the full Markit pre and post trade product set directly in order to receive additional reporting and analysis.
“We are always looking for innovative ways to help our customers streamline their trading process, and we are excited to offer them access to an industry leading TCA solution via the Eze OMS platform,” said Chris Corvi, director of project management of the Eze OMS for Eze Software Group. “This integration provides customers with high quality trading analytics and valuable insight into the impact of trades on the market to help them optimize trading decisions and reduce associated costs.”
Noted Yegerman: “In the case of Eze Software, we can integrate pretrade cost estimates into a client’s trading blotter, which they can use as input to implement trading strategies, minimize cost and help achieve best execution. We also provide post-trade analysis. We differ from other TCA products in the granularity of the information we provide which helps produce actionable ideas for improving trading strategies and reducing costs.”
Typically, TCA products rely on order allocation records, which are aggregations of individual executions. “By averaging execution prices together, these other systems provide mere measurement but aren’t sufficiently detailed to allow you to create an actionable item to test and improve your trading strategies,” Yegerman said. “At Markit, we build up implementation shortfall by looking at each individual execution, and can come up with a conceptual framework to develop ideas they can actually use to improve execution and reduce trading costs by breaking out the impact of the trader’s own activity from the wider movements of the market.”
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