And according to a report published in March by Tabb Group (Imperfect knowledge: international perspectives of transaction cost analysis), a big reason why the buy side is so interested in TCA is because buyers identify trading costs as their "most prevalent source of lost alpha".
The report’s author, Adam Sussman, points out that while equity traders have used TCA for years, the structure of the FX market has not made this easy for currency traders. That is now changing and, perhaps counter-intuitively, it is the big sell-side institutions that are facilitating the existence of more robust TCA for FX. "Brokers are playing a critical role in this development," says...
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