Trading | Execution consulting At your service
Execution consulting may not be new but it has gained traction in today’s fragmented, electronic world. Lynn Strongin Dodds reports.
It may seem ironic that buyside clients are looking for a helping hand in today’s high tech electronic markets. However, if a recent crop of studies is anything to by go they are seeking advice for optimal ways to navigate the increasingly complicated trading maze. Naturally brokers and banks are more than willing to step up to the plate not only in response to their client’s needs but also as way to set themselves apart from their rivals. In fact, a recent study from Aite Group showed that a hefty 87% of the 22 broker-dealers canvassed viewed real time execution consulting services as a main differentiator, ahead of liquidity management, algorithms, technology support and research. Laurie Berke, principal at TABB Group, who identifi ed the trend over two years ago with her report “Execution Consulting: the Next Generation in Sales Trading,” attributes one of the
main drivers to “buyside fi rms having to become more knowledgeable and experienced in self direct trading. Algorithms have become commoditised, and buyside traders no longer look towards the sellside for simple technical support but rather to add value to trading performance. This new-world sales trader offers insight, advice and information, and delivers it right alongside an in-depth quantitative analysis of the venue-specifi c results of smart order routing logic.” For now, only around 13% of asset managers
currently tap into these services according to industry fi gures but that number is expected to grow in time. In many ways, it is a reconfi guration of an offering that was tied to programme trading. The difference today is that the level of sophistication has been ratcheted up thanks to MiFID in Europe, Reg NMS in the US and a host
“Through execution consulting, we are able to drill down deeper into algo behaviours and performance to offer a more granular view of the best way to trade.”
Brian Schwieger, Bank of America Merrill Lynch
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Best Execution | Spring 2013
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