Meeting best execution policies and challenges
Best execution policies
Execution policies must be set and monitored and systems and controls put in place to achieve best execution.
New systems and strategies required
Your change team faces a number of challenges regarding best execution. Constant monitoring of performance is required and refinement of procedures to improve and critically from a compliance perspective, providing evidence of all the above is mandated.
The team needs to design an approach to compliance and then build and deploy solutions, selecting the most effective partners to provide the necessary data and tools to support the best execution services.
Monitoring and documenting best execution
Any sell-side firm executing client orders needs to establish and agree on policies with their professional and retail clients about how they will achieve best execution in advance.
You need to make choices upfront about how to provide liquidity; off your own book or by executing client orders on their behalf and how to achieve the best possible result for your clients.
You must decide which venues provide the best option. Plus, trading venues and liquidity providers (banks) will need to publish execution quality reports every quarter.
The challenge of pricing less liquid instruments
A constant challenge for the industry is finding a price for less liquid products and proving best execution. With sparse pricing and trade data available as a reference point, market participants need to look for alternatives sources and proxies.
All of the best execution performance has to be recorded, monitored and documented, so that if a client challenges you at any stage, you can replay scenarios.
On top of that, firms will need to review performance and adjust policies appropriately on a regular basis.
A key partner for best execution strategies
Our set of tools and solutions can help you choose sources for liquidity and help monitor venue performance both historically and in real time.
Eikon already provides cross market liquidity views for individual equities with both the .x RIC, providing a pan European Best Bid/Offer and Time and Sales, and the Blended Order Book object, providing a customizable view of the cross-market order book.
Eikon also provides access to the Thomson Reuters European Market Share Report, an on demand reporting tool that provides historical insights in how individual instruments have been traded across Europe.
These and other powerful new views and analytics will extend these aggregation capabilities to incorporate the full range of new trading venues and liquidity sources launched in the post-MiFID environment across full range of asset classes.
Tick History provides even greater resolution to historical data, with the ability to replay over 10 years worth of tick-by-tick data across the range of global asset classes.
Fixed Income securities can often pose a challenge for pricing, benchmarking and proving best execution. The Thomson Reuters Pricing Service provides an independent, global evaluated pricing source covering over 2.5 million fixed income securities, derivatives and bank loans. With over 100 evaluators across the world, the service offers true global coverage with local knowledge, applying consistent and transparent pricing for all evaluations.
Moving forward, we will bring a set of analytics, views and reporting capabilities that will build on top of these solutions to bring a powerful, cross-asset class, MiFID II best execution capability available through the Eikon desktop, as well as a set of services available through the Elektron environment.