How TCA provides FX execution transparency
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How TCA provides FX execution transparency

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Bank of America Merrill Lynch’s detailed transaction cost analysis (TCA) gives clients valuable algo performance insight.

Demand for performance analysis is growing

With increased market fragmentation and a wide variety of electronic execution tools, FX traders are under greater pressure to develop effective strategies across diverse market conditions. In this environment, access to a market-leading TCA has become essential.

Understanding outcomes

Sophisticated TCA can help traders identify execution strategies that are effective for specific market conditions and risk-management objectives. For clients using BofAML’s suite of algos, our TCA provides robust pre- and post-trade data.

By breaking down each component of the execution (including time of day, currency pair, size and liquidity), and providing analytics on both a per-trade and aggregate basis, our TCA offers valuable performance insight. BofAML’s service offering includes a consultative process where we review data with clients to help identify strategies to meet execution goals. 

Dissecting data

Improving the quality of trade execution means examining the data. Our TCA shows price improvement against a number of customizable benchmarks. Market average and market midpoint at order inception are provided to gauge execution performance against the broader market. Further, we include a unique benchmark where we compare the algo execution price to the principal price for the size at inception time. 

If different data are required, we can provide specially tailored views. As BofAML’s algo suite accesses a number of liquidity pools, we also provide detail by highlighting where an order is being filled.

Aggregate performance relative to our algo suite

Aggregate TCA offers the ability to analyze performance across a number of trades. Clients are able to request aggregate trade data across currency pairs, strategy, time zone and date range, receiving intelligence on the same set of benchmarks as single trade TCA, including breakdown by channel. For clients that want to gauge performance against other market participants, we also offer peer analysis.

Making trading more transparent

Understanding execution performance is the key to improving outcomes. TCA is an important tool that allows traders to evaluate execution and the need for strategy adjustments. At BofAML, our goal is to partner with clients by providing the tools and support necessary to optimize execution performance. Our award-winning TCA is an integral part of our product offering

Find out more about BofAML’s FX capabilities.

General disclaimer for Bank of America Merrill Lynch * Trading via Instinct FX is subject to Bank of America Merrill Lynch’s Electronic and Trading terms and conditions, available here.

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