audit trail so the client can understand and assess the quality of
Taking another approach, Seigne
says the firm uses a “combination
of several of our core attributes,
such as our market micro structure
expertise and our technological
infrastructure,” to help its clients
with best execution as the market
becomes more complex.
Fidessa’s Voigt explains that the
concept of best execution is not a
static one, but instead it “requires
constant re-interpretation given
recent market developments.”
Best execution will sweep across
the financial services industry on
3 January 2018 when the MiFID II
deadline is finally realised. Richter
describes best execution in such
a way that if all firms were to look
at the processes and policy in this
way, best execution might just be
achievable after all!
“Something that tends to get
overlooked; the regulator is
looking for firms to keep their best
execution policy a ‘living, breathing’ document that is updated on a
frequent basis,” he says.
transaction cost analysis tools,” he
Although Richter states that
despite the need to collect vast
amounts of data and then put all of
the data into a framework – which
is generically labelled as TCA –
this understates its importance.
“This is where you get the
insights that will inform changes
to the process by revealing what
works well and what needs attention,” he says.
Firms like Liquidnet and KCG
have best execution policy at the
forefront of their respective businesses.
Mark Pumfrey adds that Liquidnet can provide the buy-side
with the data to analyse the trades
which have been executed on its
“We discuss with our clients
what best practice is and share
our views on how they can build
a decision tree to identify best
execution,” he says.
However, Pumfrey says there is
more to best execution than this.
Firms must create a process and
collect data in order to create an
“Technology, whether in-house
or that of a third party vendor, has
a huge part to play in best execu-
tion,” he adds.
“The whole trading landscape
across all asset classes is techno-
logically-driven so the tools being
used to analyse and measure them
must be advanced from a technolo-
Fidessa’s Voigt echoes this.
“Technology for collecting and
interpreting data is a key component in meeting best execution
requirements,” he explains.
However, he adds that like many
regulatory requirements, “
technology is only one part of the answer”
and “the tools provided are only as
good as the expert knowing how to
The buy-side is already well
acquainted with technology like
transaction cost analysis (TCA)
tools, KCG’s Seigne said.
“If you speak to the buy-side –
depending on where they are on
the spectrum – they have a very
good idea of what they are trying
to achieve in terms of metrics
and there are very sophisticated