Case Study
The Client
One of largest financial companies and a major provider of institutional banking, investment management and broker services. Long-standing experience of trading electronically in European equities, offering a market-leading suite of algo execution and analysis tools to its clients.
The Challenge
Although the client was already using a white-labelled transaction cost analysis (TCA) service from another vendor, as a highly sophisticated user of TCA data and analytics, the client required a more detailed understanding of its execution performance than its existing provider was able to deliver. Critically, the incumbent vendor was unable to provide the required levels of transparency on the underlying data and methodology used to generate its TCA reports.
This level of provision was regarded as essential by the client in order to improve its workflow and make any necessary adjustments to its trading activities in European equities. In order for the client to maintain its competitive advantage in today’s highly commoditised algo-trading landscape, the ability to fully optimise its execution workflow was regarded as a key function of TCA.
A further key concern for the client was its ability to provide detailed TCA reports to the regulatory bodies as and when required. Recent high-profile fines imposed by regulators, such as the UK’s FCA, have served to demonstrate the need to scale up compliance reviews and oversight of trading activities in line with business growth. The client recognised the value of using TCA data for both regulatory reporting and for improving execution quality, but this required a level of flexibility in data analysis and reporting that its existing vendor was unable to provide.
The Solution
The client evaluated several options in terms of alternative TCA provision, with a view to building its own team to run more in-depth analytics inhouse. This would require partnering with a specialist vendor able to provide the necessary quality of data and flexibility of analysis. As the leading provider of consolidated data from European venues, big xyt was the obvious choice of TCA vendor, due to its unrivalled expertise and ability to deliver highly detailed, fully customisable sets of market data analytics.
Of particular appeal to the client was the ability to leverage big xyt’s TCA services for its own business and to use the analytics as it required, rather than being limited to the standard reports and formats delivered by its previous provider. Because big xyt was able to provide the data results automatically in a format tied in with the client’s existing workflows, the client was able to seamlessly process that data internally to allow for further analysis. With its own inhouse team, the client needed to have the results of its TCA delivered in a custom format so that it could be integrated with own data for further query and analysis using visualisation technologies based around Tableau and Power BI, rather than in an inflexible report or pdf. This allowed the client to focus on the relevant analytics instead of wasting time with potential data quality issues.
In addition, big xyt’s experience of onboarding clients allowed the whole process of changing provider to be completed within a week, with no additional allocation of resources required from the client’s side. big xyt’s ability to work with the client’s existing workflow further enabled the client’s business to continue uninterrupted, which was an important consideration as it meant the client did not need to change any existing operations.
The Benefits
Since partnering with big xyt for its TCA provision, the client is now receiving the comprehensive set of fully transparent and independently sourced results that it required. Not only are the TCA results reliably sourced but they are also now being delivered in a format that has enabled the client to develop next generation TCA usage inhouse. This is already reaping countless benefits in terms of optimised trading and the development of its own SOR. The enhanced level of service and provision was available almost immediately, as compared to the alternative of trying to build its own data analytics capabilities inhouse from scratch. Not having to build a full-size team further reduced the total cost of ownership for the client.
In addition, big xyt has enabled the client to access results for a much wider range of custom benchmarks than was the case with its previous provider. Changes can now be made immediately for almost any benchmark, allowing the client to instantly enhance its process without having to rebuild its analytics ‘engine’. This makes a huge difference to the client as it now has the flexibility to choose a benchmark and deploy the TCA results against that benchmark rapidly and seamlessly into its workflow.
As a sophisticated TCA user, the client demands more from its analytics results than simply completing an exercise in ‘ticking the boxes’. It is looking to optimise its workflows in a way that enables visibility on the impact of any changes in order to evaluate whether results were positive or negative. For example, if the client changes a broker or adjusts its trading aggression levels, it needs to instantly see the impact of these changes on its execution performance. In order to do this, the turnaround between uploading the transactions to the TCA provider and receiving the results has to be faster than ever before. big xyt is able to provide not only the flexibility but also the speed of processing to achieve this outcome.
The Future
At big xyt, we understand that control of the whole TCA process is increasingly moving from the hands of the provider into the hands of the consumer. This in turn demands a whole new level of control and customisation, not only in line with regulatory demands but also to satisfy the growing need to fully understand execution data in order to enable better decisions at the business level.
big xyt is now unrivalled in its ability to capture and normalise market data, perform comprehensive analysis and deliver the results in a flexible and customisable format. Increasingly the investment community is realising the benefits of working with a specialist vendor such as big xyt, as opposed to the time and cost of trying to replicate that data science inhouse.
